I had a nice chat with a fellow value investor in London who recorded his thoughts on the conversation, and kindly allowed me to reproduce it. Lesson 4: “Mean Reversion” Note from me: If you’re interested in this, get a copy of Against the Gods. Its brilliant. Prices, in long-term, will return to their mean. This is also John Bogle’s way of looking at the market from a general picture point of view. Moreover, mean reversion will help the investor to identify possible bubbles-wild fluctuations of prices that tend to sky-rocket and then plummet back to earth to reflect a number closer to the real value of the company. This does not mean that markets are rational. It means that in long-term, it is the business value that wins and not the short-term market vicissitudes. Lesson 5: “Free cash flow” As a new and enthusiastic value investment scholar, I read ......