Graham’s (via Zweig) admonition to be a critical thinker is, well, critical to being a good value investor. So what does that mean? What do I need to think critically about? Zweig gives us a clue when he refers to “Wall Street ‘fact.'” Obviously, that would refer to fact and figures in annual reports and 10-Ks. It would include any form of advertisement, be it an ad in Smart Money magazine or listing in an “unbiased” assessment in an article in The Wall Street Journal, touting the stocks you should be in now.

Not so obvious is the need to read between and behind the lines of such “facts” as you assess the relative merits of the stocks your screener tells you to look into further.

• Why are they undervalued?
• Is there or could there be a regulatory problem?
• Why did that insider sell (or buy)?
• Is there a problem with that newly announced product? Why isn’t the market responding to it?
• Is something amiss with management or a location?
• What are shareholders saying on the Internet and in the press? Are the positives really positive and the negatives negative?

And so on. Value investing is detective work, pure and simple, and the Colombos of the investment world will virtually always be taking money from the Detective Clouseaus.