5 value investing challenges

1 – Dealing with Uncertainty

It is impossible to predict what might affect the economic scenario. Therefore, at Ártica we choose to invest in companies that are capable of continuing to operate in positive and adverse scenarios. For this, their businesses must be adaptable to different macroeconomic scenarios, or these companies must operate in naturally stable market sectors.

2 – Buy in moments of panic in the market

In bearish cycles, some investors let themselves be influenced by the market moment and start to not believe in the companies they bought in the past, and decide to sell them at any price. It is at that moment, that we seize the opportunity and buy shares at extremely cheap prices.

3 – Drop resistance

When you buy in the midst of crises, it is common to see your stock falling for some time. This requires both analytical skill and a good deal of psychological toughness. In these moments, we always remember the rationale of the invested thesis, as well as, we look at other economic crises that we have already gone through, and how after a while, the market always recovered.

4 – Tendency to act

In times of turbulence and bad news, most investors feel obliged to remedy their “losses” by constantly moving their portfolio. However, this news is unlikely to have a negative impact on the result of the thesis in the long term, so the best alternative is to simply keep the stock in the portfolio.

5 – Lack of feedback

An investment thesis can take years to prove right or wrong, therefore, the more accurate the analysis, the greater the chance of assertiveness. Here at Artica, we are extremely cautious about this. Therefore, we have an analysis process divided into several stages, and we only approve a thesis if, at the end, there is unanimity among the management team.