John Rogers of Ariel is a value investor who often appears on CNBC’s Squawk Box. This transcript is posted here because it was distributed by an employee of the CFA Institute for free on LinkedIn. If anyone at the CFA Institute objects I will take it down. (Update 12/3/10: I was contacted by someone at the CFA Institute who requested that I link to the article on their website instead of uploading it. The link is attached.) From the December 2010 Conference Proceedings:
http://www.cfapubs.org/doi/pdfplus/10.2469/cp.v27.n4.6
If I were to nit pick, I would say that one has to be extremely careful when thinking about John Rogers’ concept of “vision.” If he means that one must be able to predict the future, which most value investors would say is impossible, then I think he is setting himself up for disaster. If, on the other hand, he means that one must have a philosophy about how the world works and work within that philosophy when preparing for the many possible future outcomes, then I completely agree with John.
I would also add that John is correct to say that markets are pretty efficient for firms such as Ariel, which has $4.8 billion in equities under management. The investment opportunity set for such a firm mainly includes large, fairly well known businesses. There is rarely a chance to find firms with a large margin of safety in that set, although Ariel has a fair amount of mid-cap names in its portfolio.
