Investing according to qualitative rather than quantitative criteria?

I often read comments on the Internet about the qualitative aspects of a company's development. They talk about medium or long-term prospects, the skills of managers, rumors of opening/closing a new site, launching a new product, discoveries in the R&D sector, possible social plans, legal action, etc. The Web is a huge gossip room that resonates (if not reasoned) with an incalculable and difficult to interpret amount of more or less credible and relevant information.

As an example, here are some typical sentences found on the network:

• "managers lack experience / management is aging"
• "I wonder why management is selling/buying at this price"
• "It is a promising company, with many developments underway"
• "It is difficult to explain the reasons for such a low order book"
• "The outlook is bad because the market is very competitive"
• "It's a hypothetical but quite probable scenario"
• "There are serious rumors about the sale of branch X"
• "The company is facing major difficulties because its sector of activity is at the end of its tether"

As we can see, we remain at a level that is often very subjective and hypothetical. The conditional is appropriate, as well as "I think / I imagine / it seems to me" and it is very difficult to form an opinion based on information that is most of the time contradictory.

Beyond all that, what is common to all these comments and what is especially problematic is that we are very far from the facts. Instead of talking about tangible and real elements, namely what really determines the value of a company, we beat around the bush, without ever tackling the problem head on. We tinker, we blabber, we waste our time and we forget that what matters is to buy at the best price in relation to what is known and factual.

Imagining what will happen in x months or years is not scientific, even using the most beautiful jargon of an accountant straight out of high schools. It is just speculation. It is very difficult, if not impossible, to obtain results like that. Warren Buffet certainly integrates many qualitative variables into these approaches, particularly in relation to business management. The difference is that this financial genius, thanks to the enormous means he possesses, in addition to his IQ, can have a significant influence on the managers of the company precisely. He also never loses sight of the quantitative aspects. His approach is difficult to reproduce by ordinary investors.

The other problem with all this gossip is that we lose the big picture. We focus on this or that problem, this or that new thing, but we forget to look at the company as a whole, with its more or less long history. Discussing endlessly about the reasons for the drop (or increase) in profits in the last financial year is not going to change the situation. Profits are fickle by nature, there will always be increases followed by decreases, this is not what should worry (or excite) investors.

The proof is in the facts, that's all there is to it. If you buy a quality company at a good price, you don't give a damn if its order book is not as well stocked for a while. That's just normal. Similarly, a firm with a certain history, especially if it operates in a defensive and not too complex sector, can live and survive with almost any manager, regardless of whether he is young, old, dictatorial, megalomaniac or half-crazy. We don't care about all this, as long as the facts, that is to say the results, follow.