Never let the ticker tell you anything
The cornerstone of value driven philosophy is this: The stock price doesn't tell you the value of the company. Never let the stock market tell you what is the value of the company.
This is very intuitive to understand. The value of the company is driven by its current assets and future earning potentials, and though largely efficient, many times stock market can get it wrong. Many investors try to follow this approach. But very often when the same investors try to see if they have made the right or the wrong stock pick, they look at the stock price appreciation (or depreciation) over last few months. Well, if the stock price was not a good indicator of the value of the company when an investor had picked up the stock, there is little evidence it becomes a good indicator a few months after she picked up the stock. It could have gone up and down because of a number of unknowable factors like inflation, growth prospects, fed printing, interest rates, a tiny virus and what not. So how can the stock market tell you have made the right/wrong decision?
When a long term investor picks up a stock, I assume he/she is picking it up because of certainty of long term growth potential of the company, its ability to protect cash flows across economic cycles, ability to invest in growth at high marginal ROE and good capital allocation. And of course all of this should be available at reasonable price (the criteria may differ but the logic applies irrespective of whatever criteria you choose). So if an investor wants to judge her investment decision a few months or years down the line, the only things she should be judging is whether the long term growth potential is intact, the cash flow has been stable (other than for one time factors), the marginal ROE of recent capex has been high and capital allocation has been good (or any other criteria she had originally used while purchasing the stock). Judging the decision by stock price appreciation leads to the same herd mentality which a long term investor ought to be avoiding. If we let our decisions be evaluated by recent stock price performance, our subconscious would forever identify good stocks as those whose stock price has recently increased and bad stocks as those whose stock price has recently tanked. And we will always be in some kind of buy high - sell low frame of mind.
This approach leads to some valid questions. For example, if the stock prices don't really appreciate what's the purpose of investing? Let me put this question around and say, if we are sure the value of the company is increasing (as determined by the factors mentioned in the previous paragraph), do we really believe the stock price is never going to appreciate? Without this faith, there is little difference between a headless chicken and a share market investor. Short term stock performance is an unknowable and trying to tie your approach to an unknowable factor is like tying yourself with a mechanical bull. Of course track record of an investor is important, but anything less than a duration which covers an entire market cycle (peak to peak or trough to trough) measures the market madness as much as the investing prowess. Thus long term returns can be used as a milestone check, but the only way short term performance can be evaluated is based on the original criteria of the investment. This may be a controversial statement, but to my mind there can be no other way to invest based truly on value.