I have read a few articles about value investing, and a few biographies of value investors. I am under the impression that value investing does not involve chart reading or technical analysis at all. In fact, value investors don't seem to be concerned about downward chart trends. Is my understanding of the situation correct? Why do value investors ignore technical analysis?
Why do value investors ignore technical analysis?
Technical analysis tries to predict future behavior from past behavior purely by looking at prices (and possibly other stats like volume traded). Fundamental analysis looks at the present fundamental financial attributes of a company (and possibly the recent past of those fundamentals) to predict future fundamentals. It is not concerned with what the stock price was, they are guessing what it should be and whether to buy it based on where it is now. For "value" investors, this means specifically if the price is significantly below what it should be.
To be fair, they may be concerned about things downward trends, but not from a graphical standpoint - they would want to know why there was a downward trend. Is it something that the company has corrected? Or can they correct it with new management (which was a large part of Warren Buffett's strategy)?
Technical analysis is largely based on short-term trades (less than a year). Signals in charts are indicative of market opportunities, and the underlying price or corporate fundamentals are less important. When a value investor is investing, they look deeply through financials and corporate guidance, executive team, and strategy in order to determine whether a company is trading below it's 'potential' value and buy based on the hope the market will recognize this previously unseen value.
Buying based on technical analysis is essentially trying to 'time' the market, whereas value investors are usually of the opinion that you shouldn't try to time the market and that value is value.
Technical analysis is based on old experience and statistical trends. I personally don't believe 100% in technical analysis because it's somewhat similar to fortune telling. You see a certain trend and so you must buy, hold, or sell. It's not much different from saying you must be a certain kind of person because you are Capricorn.
I believe many value investing would pay attention to downward chart trends, but the point is how they interpret the trends. Technical analysts may see the downward trend as signals for buying or selling depending on the pattern, but value investors would do their due diligence and find out whether the trend can be justified by "facts". The stock could have gone down because of poor earnings, mismanagement, bad industry outlook, fake news, irrational herding... and so on and on. Technical analysis cannot tell you facts like those.
Value investors evaluate fundamentals, and make decisions based on their outlook on the target asset.
Technical Analysis seems more about trying to guess the market's next moved by comparing the available market data for a company against historical trade data of many/all companies and hoping a pattern matches to help predict the future. "On sunny days, people in blue pants are generally happier, so given it's sunny today let's see if Mr. Market has blue pants on."
Value Investors analyse the companies current financial state and past record (not price) to calculate the value they believe the company to be worth. The number of factors, including each individual's risk appetite/margin of safety applied, available data, knowledge of the levers a company has available to pull to influence profits and the management team that can pull them, etc. all mean that different people will arrive at a different per share value for the same company (occasionally reviewing that "buy below" number at certain times/under certain conditions). Once a value has been determined, Value Investors simply wait for the price to go below that number before buying. "I know what I think the shares are worth, let's see how much Mr. Market willing to sell/buy at".
Value investors each use a different margin or safety in their formulas, and may consider different points of data better in assessing value based on their personal risk appetite, thus the different values they arrive at. They don't assume the price will change in their favor, so they try to determine value. If they purchased below their assessed value and the company gets sold off, their share in the proceeds from the sale of the company is (ideally) worth the same/more than they paid for it. Dividends and share price increases along the way are a bonus and/or opportunities for profit.
Technical Analysis is trying to determine when and in which direction the price will change to find an entry/exit point with profit in between, and as a result I suspect those using purely technical analysis will trade more frequently which incurs more taxes and fees, or at least that's how it seems to me.