Investment Edge: Robert Robotti Reveals The Three Sources of Edge In InvestingVW Staff
How can you gain an investment edge in the stock market? Edge is an elusive but crucial concept in investing. Without it, you might as well buy a low-cost index fund. In addition, investment edge can be temporary or sustainable. The latter represents the goal of investment managers — to obtain sustainable competitive advantage by developing an investment edge that can stand the test of time. In my exclusive interview with highly regarded value investor Robert Robotti, President of Robotti & Company, Bob reveals three sources of investment edge and cites several real-life examples. The full interview is available below as an episode of the Value Investing Podcast.
Investment Edge: The Three Key Sources
In the conversation, Bob Robotti discusses the following three major sources of investment edge:
- Information edge: Gathering a significant amount of data on a company or industry, which allows an investor to put together a “mosaic” that provides unique insight
- Analytical edge: Processing the data in a way that allows for unique and actionable insight, either through possession of a superior model or superior judgment
- Behavioral edge: Acting in a way that allows an investor to tune out the market noise and act rationally when other investors are exuberant or fearful
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