San Francisco Financial Planner, San Francisco Financial Advisor

For many years, a popular investing theory has held that the stock market is efficient. In other words, a stock’s price reflects everything that is known about a company, from how the economy is affecting it to how its management is doing. As a result, according to this “efficient market” theory, there can be no overvalued or undervalued stocks. Investors who beat the market year after year are simply lucky, like monkeys flipping coins for bananas.

In his speech—which commemorated the fiftieth anniversary of Security Analysis, a treatise on value investing written by Benjamin Graham and David Dodd—Buffett challenged the efficient market theory by pointing out that a small group of investors have beaten the odds and achieved consistent success in the stock market  What did those investors do differently? They all came from the same place...