Ah ok. Yeah their are those questions. Well if the price does fall alot I guess you analyze why it fell alot and possibly buy more because it could be cheaper. Or sell because you made a mistake depending on why it dropped of course. The 2 components I was talking about I believe I heard it from Roger Montgomery. I mean sure there is stuff like competitors that you must look at but I believe these are the 2 core components.You might not agree with Tech's view on value investing, but I think he raises a valid point.
So you've found a quality business and calculated that it's currently priced at a discount to its intrinsic value. That alone hasn't made you any money yet, so there must be other components to success.
If you bought every quality business the moment it trades below intrinsic value and held until it returned to intrinsic value, is that profitable? What if you only bought the ones that were trading at more than 20% discount? How far does price need to drop below intrinsic value before it's worth buying? Will you buy more if it gets cheaper? If it continues falling, is there a point at which you consider your evaluation may be flawed in some way? Do you sell when it returns to intrinsic value or do you hold, expecting the quality business to rise in value? Or maybe you sell when it's "close enough" to intrinsic value, freeing up some cash to put into a more heavily discounted business?
I'm not actually asking these questions, just presenting them as examples. I know nothing of value investing. I don't have what it takes to be a value investor. But I suspect that generating a list of quality business trading at a discount is only a small part of what makes an investor successful. When you eventually come up with a detailed investment strategy, remember this thread and ask yourself what the duck asked - How do I know this is profitable?