Value approach can somewhat protect against 'train crash'

The contrast between the confidence that drew the FTSE All-Share index towards an 18-month high at the start of April, and the panic that has enveloped markets since then is stark.

Yet what has really changed? With so much of the industry focused on short-term calls, this volte-face is unsurprising. What is disconcerting is the way certain risks, such as sovereign debt default, were conveniently dismissed, only to be followed by shock as April moved into May. There is the famous analogy comparing markets to a tube train that will crash sometime in the next 10 stops. A value investor will never get on board; a momentum investor will ride the train for a few stations, speculating that he or she could alight in the nick of time. We have seen some of the panic that...