One problem with looking for bargains in the scrap yard of the stock market is that you will find many stocks that deserve to belong there. These stocks may appear to be bargains, but they may be the kryptonite that will destroy your portfolio. As many value investors find out over time, sometimes the stocks… [Read More]
A Beginner's Guide to Investing in Stocks Using Value Investing Principles
How to Start Value Investing?
Value Investing is as much art as science and the investor psychology plays a great role in the success or failure of your investment strategy. The following compilation of articles and writings form a comprehensive value investing guide for a disciplined investor. These articles introduce the reader to the fundamental concepts in value investing as well as ideas, tips and tricks on appropriate actions to take at various different situations the investor is sure to encounter during his or her investment career.
Investing in the stock market is a way to participate in the wealth creation process in the society. While it can be very rewarding, beginning investors are often confused with the various concepts and can make mistakes if they do not follow the right investment strategy. We are putting together an investment guide that explains various concepts and terms you will come across as a investor. Whether you are a beginner or an experienced investor, you will find resources that will help educate, explain and clarify.
How to Use the Value Investing Guide?
This investing guide is logically arranged starting with major concepts or ideas. As you drill down, you will be presented with related concepts that you can explore further. In addition to defining the term and illustrating with examples, we have added narrative to show how to use these concepts in practice. These might include things to be watchful for, when to and when not to do a certain thing, other ideas that may be related but not intuitively obvious, etc. This is a work in progress and over time this will be expanded
There is no specific way to use this investment guide. However, we will outline 3 possibilities.
- Start with the top level topic and navigate to related topics as you read using the links on the page
- Use the search engine duckduckgo.com and add a "#!vsg" at the end of your search query (without quotes). For example, if you are searching for "stock warrants", you will write this in the search box "stock warrants #!vsg". This will take you directly to the search results on Value Stock Guide for your query
- You could also try the Search from the top of the page
Quick Start Value Investing Guide
The following articles will give you a quick overview of my investment philosophy and basic concepts for a successful value investing practice. This is a great place to start and then you can chose to go further and deeper in each topic from the more extensive list that follows
Quick Start Guide to Investment Strategy
Other Popular Articles on Investing
Detailed Beginner's Investing Guide
Explore the value investing process and concepts in greater detail with the following articles in the value investing guide. This is a work in progress and will be expanded continuously over time.
Great value stock picks start here.
View articles in other categories: Dividend Stocks, Large Cap Stocks, Mid Cap Stocks, small cap stocks, Macro-economic, Value Investing Tips, Investing Questions, Business, Personal Finance, Investing Definition
In the lore of value investing, net-net stocks hold a special position. These are true, so-called free money stocks. To see why, consider the following hypothetical question: Suppose there is a company that you can buy up for $100. Once you do, you can simply close up shop. You payoff everyone you owe in cash,… [Read More]
Magic Formula is a stock screen popularized by Joel Greenblatt in his book “The Little Book that Beats the Market”. According to his backtest, 19 years so far (as of nov 2019), the methodology presented consistently beats the S&P 500 index. Greenblatt recommends buying 30 companies every year with highest earnings yield and return on… [Read More]
According to the Joseph Piotroski’s 2002 paper, high book to market stocks filtered for high Piotroski f-score (buy), and low Piotroski f-scores (short sell) increases the annual returns on average by 7.5% over a market basket of high book to market stocks. A high book to market portfolio outperforms a broad market index over time…. [Read More]
Let your money make you more money. Intuitively we understand the concept of compounding your savings or investments. In practice, impatience and lack of discipline interrupts any compounding we have achieved in our wealth before it becomes a force of nature. We speak of compounding in terms of money, and perhaps it is best illustrated… [Read More]
I did not invest in my first stock until I was 27 year old. I did not know much about the stock market. So much so that in my first job I chose to forego stock options and chose cash instead. Life would have been very different if I had taken a little bit of… [Read More]
If you are a new investor looking to find your feet in the stock market, you need to understand the different investment strategies and match these to your personality. I am a value investor, and I advocate for value investing, however value investing only works for certain types of investors. As someone just starting to invest in the stock market, read through the following description of various stock investment strategies and see what strategy appeals to you most.
SWOT analysis is a powerful tool for understanding a company’s market position. If you haven’t already used SWOT analysis, you should. Read on to learn more about what SWOT analysis is, how to use it and why.
Knowing the financial health of your company comes with a lot of equations and terms. One that you need to know is “profit margin.” What is it, why does it matter and how do you calculate it? Read on to learn more.
Free Cash Flow is a way of measuring a company’s financial performance. In essence, Free Cash Flow is the amount of money a company or firm can generate after spending the money they must in order to maintain and/or expand its assets. FCF is important because it tells companies – and shareholders – how much money could be dispersed to those shareholders, if no further growth occurred.
Investing can be a complicated process. One of the most popular forms of investment is an ETF – an Exchange Trade Fund. They’ve been available since the 1990s and are common components of a financial portfolio – especially for first-time investors. Read our short ETF guide to learn more about what they are, why you should consider adding one to your portfolio and how to wisely invest in them.
An investment portfolio is a fantastic way to grow your savings and make wise financial decisions for your future. One type of investment, in addition to just general stock investments, is the stock option. Read on to learn more about what it is and how stock options work.
Value investing is an incredibly profitable strategy when it comes to investing in the markets, but so much of the philosophy is rooted not just in formulas, ratios, and models but also in having the right temperament. How you act as an investor has a lot to do with whether you succeed or not. Here we list 6 of the stock market success secrets that are vitally important if you want to be a good value investor
How do you find the perfect value stock?
Sometimes, if you are patient enough, the stars align and all the necessary conditions coalesce, offering up a perfect value stock to investors meticulously scanning the landscape.
The trick is to know when this happens
However value investors should not make the mistake of equating long-term investing with “buy and hold.” Buy and hold is a passive strategy used by investors who buy a security and hold it basically forever, periodically adding to their position over time. In fact these investors are the opposite of value investors in a sense because they are typically price-insensitive, buying no matter what the price and circumstance. Value investors on the other hand want to purchase stocks at a discount to intrinsic value and are very price sensitive.
Investors who are looking to purchase stock in a company are faced with a whole laundry list of decisions to make. One of these decisions – and a very important one – is whether to purchase common or preferred stock. In order to determine which is the best fit for your portfolio, it’s important to understand the difference between common and preferred stock and the potential pros and cons of each. Read on to learn more.
There is more than one way to be a value investor.
The classic value investor is someone like Benjamin Graham, often heralded as the father of the craft, who seeks to invest in companies whose shares are trading at a discount to intrinsic value. Intrinsic value is just another way of referring to a company’s “true value”, or what it might be worth if the firm had to be sold off entirely.
Another type of value investor uses debt instruments rather than equity as the means of gaining exposure in the market. This type of investor is a distressed debt value investor and practices a distinct style of its own.
You might think, on first glance, that deflation and disinflation mean similar or even identical things. After all, the concepts they imply seem remarkably alike, don’t they? If you were to deflate a tire, wouldn’t it be the same as disinflating it? But this is actually not the case. Deflation and disinflation, in the field of investing and finance, refer to drastically different things.
At first glance, the effects of deflation can seem like a good thing – after all, deflation is accompanied by falling prices, which certainly make consumers happy. But deflation is often a sign of a recession and, in the long run, is not a good thing at all. Here are four reasons why:
GARP, or growth at a reasonable price, is an investment strategy that seeks to combine the tactics of value and growth investing into one coherent strategy that an investor can use to select individual stocks.