Value Investing in 2025: Not Your Grandfather's Strategy

Dear Fellow Investor,

"Price is what you pay, value is what you get." - Warren Buffett probably said this while using a flip phone. Today, we're updating value investing for a world of AI, cloud computing, and digital assets.

The Old Rules vs. New Reality

Traditional value investors looked for:

• Low P/E ratios

• Strong physical assets

• Steady dividends

• Simple business models

But here's the problem: The most valuable companies today often have:

• No profits (yet)

• Few physical assets

• No dividends

• Complex digital business models

Modern Value Investing: The New Playbook

Here's how I adapt classic value principles for today's market:

1. Look Beyond the Balance Sheet Old way: Count factories and inventory New way: Evaluate:

• User bases and engagement

• Network effects

• Data assets

• Brand value in social media age

2. Redefining "Moats" Old way: Patents and physical distribution New way: Look for:

• Platform lock-in

• Network effects

• AI/ML capabilities

• Developer ecosystems

3. Customer Value Analysis Instead of just P/E ratios, I look at:

• Customer acquisition costs

• Lifetime value

• Churn rates

• Viral growth metrics

Real Example: A Tale of Two Companies

Company A:

• Low P/E ratio

• Lots of physical assets

• Steady dividend

• Shrinking market share

Company B:

• No P/E (not profitable yet)

• Few physical assets

• No dividend

• Growing user base and improving unit economics

Traditional value investors might pick A. But B could be the better long-term value if its economics prove out.

My Modern Value Checklist

Before investing, I ask:

1. Does this company have scaling advantage?

2. Are unit economics improving with size?

3. Is their data a competitive advantage?

4. Do they have pricing power?

5. Is their growth sustainable?

Warning Signs in the Digital Age

Watch out for:

• "Tech companies" that are really just traditional businesses with an app

• High user growth but deteriorating unit economics

• Digital assets without real competitive advantages

• Companies losing the AI/ML race in their industry

Finding Value in Different Places

Value can hide in:

• Overlooked old economy companies digitizing well

• Tech companies after market overreactions

• Companies with misunderstood digital assets

• Businesses transforming from physical to digital

What's Next?

Next month, we'll explore factor investing – because sometimes the best values come from understanding what drives returns.

Keep ascending,

Cash

Disclaimer: InvestorAscent provides educational content only. This is not financial advice. All investing carries risk of loss. Always do your own research and consult qualified financial professionals before investing.