Greg Speicher published an interesting post today comparing two strategies practiced by long-term value investors: Graham-style small stock bargain hunting, and Munger-Buffett-style investing in large caps with strong compounding.
I feel that it is a bit unfortunate that Buffett's statement that with less money to manage he "could generate annual returns of 50%" is commonly taken as an endorsement of the bargain hunting approach. In fact, Buffett's investment approach has shifted from looking for mediocre companies at bargain basement prices to looking for excellent companies at fair prices, largely under the influence of Munger. Anyway, this is a major topic that deserves more attention, and I hope to revisit it in a more detailed post some time in the future. For now, though, check out Greg's post.