Below is the formula for value investing as well as why this subbreddit is a contrarian investing subreddit and not a value investing subbreddit.
Step 1: Do I understand the business?
Step 2: If I understand it, then is it predictable? By predictable, I don't mean predicting how much money it will make next year. I mean, will the product or service have value to society 20+ years down the road?
Step 3: Once I have decided those two things, then I have to decide what it's worth. Keep in mind that the government has increased the money supply 7% on average every year so a business needs to be earning at least a 7% return on equity just to tread water.
Step 4: Once I've decided what it is worth, then I go see if the stock is trading below what it's worth.
That is the formula for value investing.
Most of the conversation in this sub are about unpredictable businesses, not to mention hard to understand businesses. I can't help but wonder if most of the people here are looking for entertainment out of their portfolio rather than to earn an adequate return with a high level of safety. Most posts I see are people trying to take a contrarian view and sit on the edge of their seat to see if they are right. It seems egotistical to me and contrarian investing isn't necessarily value investing, though it often times can be.
It is hard to find an understandable, predictable business trading below it's intrinsic value because if the business is understandable and predictable, the market is almost never going to give it away for less than its worth. Many of the "value" stocks being talked about here have big question marks looming over them and I think if people were being honest, they don't really know what's going to happen, and if they don't know what's going to happen, then they can't value the security. The goal is to create a model that attempts to turn an equity into a bond.
Another thing I see here is the idea that traditional value investing isn't viable anymore. This is either coming from a place of ignorance, a rationalization for gambling, or a cop out for not wanting to do the work of starting with A's and working down the list of tens of thousands of businesses. In order to find a cheap, understandable and predictable business, the investor usually has to look for a structural situation that causes people to sell things for less than they are worth.
The 4 primary situations I have found is:
1: Tiny illiquid companies on obscure exchanges.
2: delistings and relistings
3: socially unacceptable businesses (think tobacco)
4: tight money in the economy (think GFC) or broad economic pessimism (think 2022).
The tiny illiquid companies on obscure exchanges allows for the constant hunting of low p/b or low p/e stocks. And if a person is managing less than say 10-50 million dollars, there will always be enough of these tiny value stocks to build a portfolio because people simply can't invest there because of the illiquidity or they won't because they can't make investment decisions alone without reading the write ups of other analysts or getting second opinions from people. If I write up a tiny Estonian stock on reddit, I'll be lucky if I get one thoughtful reply, because no one cares. Not enough controversy, too boring.