Wealth Freedom: Investment Master’s Guide to Income-Focused Stock Selection

Liberty Times’ Wealth Freedom channel has teamed up with Taiwan Economic Journal to launch “Investment Masters’ Stock Picks,” a series that applies the selection principles of international investment managers to Taiwan stocks.

The featured strategy examines the approach of Charles Brandes, a protégé of Benjamin Graham and the founder of Brandes Investment Partners. The article highlights the firm’s growth in assets under management from $130 million in 1974 to more than $75 billion, as well as the reported long-term performance of funds associated with Brandes.

Brandes’ approach centers on value investing. It rejects relying on forecasts of the future and instead emphasizes a company’s true value and a margin of safety, meaning the cushion created when an asset’s intrinsic value exceeds its market price. The idea is that buying at a sufficiently low price can reduce the risk of losses even if business conditions or the market deteriorate.

To translate those principles into a quantitative framework, the study uses company net value in place of a traditional discounted model and builds a backtesting system to examine historical performance. It covers all companies listed on the Taiwan Stock Exchange and Taipei Exchange, drawing on stock prices, financial statements and director and supervisor shareholdings collected over a 10-year period beginning in 2013.

Because the strategy requires the most recent five years of financial information, the actual backtest runs from Jan. 1, 2020, through April 21, 2025. The article says the results are provided for readers’ investment reference only.