In this post, I will try to explain my underlying philosophy for portfolio construction in more detail, the reason for doing so is to present an executable method for serious investors who may not have thought about value investing in this manner. Component selection and exit strategies will be discussed in later posts. First thing to internalize and accept is that value investing works. However, most of the time it works in the long term (5+ years) and very rarely works in the short term (less than 2 years). The reason it always works in the long term is in fact precisely because it doesn’t always work in the short term. Although that sounds like convoluted logic, what it means is that people give up on the strategy due to under-performance, short term greed, impatience and a complete lack of understanding of the nature of mean reversion; this results in ......