Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! The bull market continues to drag on. The cash balance at most value… [Read More]
Best Value Investing Blogs, Tips and Articles
Value investing is an investment strategy popularized by Ben Graham and has proved to be a superior investment strategy over long investment horizons. We all like to buy products and services on sale - value investing just extends the concept to buying and selling stocks. It tends to simplify the investment process by eliminating confusing and generally useless concepts often part of the advanced financial and management academic programs. The success as a value investor arises from understanding the business and also by staying disciplined. Therefore, value investing is as much a financial concept as it is a change in investor behavior.
As many enterprising value investors realize after many years of "value investing" in practice, just learning the concepts and methods does not make you into a successful value investors. If this was enough, you would see a large number of very successful value investor mutual fund managers with enviable long term track record. Sadly, it is not so.
In addition to learning the methods and tools of value investing, you have to acquire a certain behavioral attributes that define a value investor. A sincere appreciation of value, a healthy rejection of whatever market sets as the price as a true reflection of value or a given asset, and the guts to stay with own analysis and research for a long period of time DESPITE an uncooperative market.
In fact, the markets are normally against you for most of the time you are invested in any undervalued asset. This created a great opportunity to acquire the asset for cheap, and you did. Wouldn't it be great if once you buy something, the market quickly moves to realized the value for you? Unfortunately, this is not how it works in reality, so you need to be able to call upon a set of behaviors and beliefs to be able to wait patiently for your profits.
At Value Stock Guide, I believe that there is enough material out there that teaches you how to calculate a certain ratio, or create a discounted cash flow model. This is not the secret to investing successfully for long periods of time. The secret to investing successfully for long periods of time is how you act and react at the edges. Do you display conviction in your ideas when the stock goes against you, or do you fold meekly? How do you build up this conviction? Isn't taking the easy way out like everyone else more comforting? Why do you invest - is it because you like the thrill of buying and selling, or is it because you patiently want to see your portfolio grow? Can you sit and watch the paint dry for days, if you know that at the end of the week there will be a substantial reward waiting for you?
I tackle many behavioral and soft side of value investing on these pages. Sometimes I also talk about the concepts. No one has ever become a good investor without building their core base of correct foundational investing attributes. You can do this here.
The articles below explain the concept of value investing, tips and tricks including articles aimed at beginner and advanced investors. Many of the concepts presented here are result of the evolution of value investing practice over time. Original value investing research and strategies are also posted here.
At some point you will wish to start using some of these ideas in your investing. We can help you find the best stocks to buy now and create a well optimized and high performance portfolio.
View articles in other categories: Dividend Stocks, Large Cap Stocks, Mid Cap Stocks, small cap stocks, Macro-economic, Investing Questions, Business, Personal Finance, Investment Guide, Investment Definitions
Further reading
| How to get started in stocks |
3 Signs a Company is Manipulating Earnings and Profits
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! This article comes from Ryan Maxwell of FirstRate Data. During economic booms, weak… [Read More]
Is the 2020 Bear Market a Value Investor’s Paradise?
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! The Covid-19 pandemic has rocked the world in 2020. The key financial markets… [Read More]
Earnings Power Value: A Broader Approach to Valuing Stocks
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! For many, the art of value investing may seem to be decidedly “kludgy”…. [Read More]
6 Most Important Financial Metrics for Value Investing
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! As a value investor, you have no doubt come across many of the… [Read More]
Where to Invest Money When Markets are Overvalued
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! When the markets are overvalued, such as now, we value investors tend to… [Read More]
When Should You Use Graham Number in Stock Valuation?
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! Ben Graham gave us many of the core concepts of value investing. He… [Read More]
The Rare Rational Asset Manager
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! Let’s imagine an asset that you are considering acquiring. You know that there… [Read More]
What Should You Invest In: Good Companies or Good Stocks?
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! We often hear – buy good companies and you will do well over… [Read More]
9 Important Investment Advice from Warren Buffett that will Make You a Complete Investor
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! Value investing practice grows by learning from investors who have come before us… [Read More]
Ignore Buffett: Book Value is Still Relevant for Value Investors
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! Buffett no longer relies on book value as a valuation metric. Among the… [Read More]
James Holzhauer: Guide to Optimizing Investment Bets for Maximum Portfolio Growth
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! James Holzhauer is currently in an unprecedented run on the game show, Jeopardy…. [Read More]
Uber IPO: Should You Invest?
Some of the links on this page may be affiliate links. If you click on these and buy a product, we will earn a commission at no additional cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases.Thank you! Uber IPO is scheduled for Friday, May 10. The stock is being offered… [Read More]
What does Return on Equity Mean?
Return on Equity is one of the primary financial ratios investors use to judge a company’s operations. If I were to pick one metric that matters (OMTM) for investors looking into a company’s operational excellence, return on equity would be the that metric. It appears to be Warren Buffett’s favorite metric.
Ratios Can’t Always Tell if a Stock is Undervalued
Financial ratios are an integral part of a value investor’s arsenal.
But, they do not always tell the full story. Or even the right story.
As an investor, you need to consider the ratio analysis as a part of what you do. The other part is to try and build a story around your investment and then see if the story checks out.
Limitations of Financial Ratios
Why Value Investors Do Not Make Good Entrepreneurs?
An entrepreneur can be described as a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so. The latter part of that definition is a major reason why value investors are not good entrepreneurs. We hate risk.
A Value Investor’s Search for Off Balance Sheet Liabilities and Assets
To investors, Enron appeared strong and prosperous. However, what was hiding outside of their financial statements would lead to one of the largest scandals in Wall Street history. Chief Financial Officer, Andrew Fastow, argued a clever twist of the rules prior to being handed a six year prison sentence. By the end of 2001, everyone was left wondering what had just happened.
Although Enron’s manipulation was deemed illegal, many publicly traded companies partake in similar methods without raising concern from regulators. It is an accounting practice commonly known as off-balance-sheet activity.
Let’s get into what off-balance-sheet activity is and how it is used.
Dangers of Excess Portfolio Diversification – How Many Stocks are Optimal
Over-diversification presents a clear risk to most investor’s portfolios. A typical investor is now diversified beyond the optimal. As a result the benefits of diversification are blunted, while the rewards are reduced due to over diversification. An optimally diversified portfolio should consist of 20-30 stocks in a variety of industries.
Anti Martingale Strategy Applied to Value Investing (Scaling into Positions)
One of the consequences of using a volatility based position sizing strategy (we use the risk parity method) is that for highly volatile stocks, you may start out with a very small initial position. However, the level of undervaluation in the stock may call for a larger position to be eventually established.
This may lead you to wonder if the philosophy of value investing precludes us from using these portfolio optimization strategies.
Not at all.
Kelly Criterion in Value Investing to Maximize Portfolio Growth
Kelly Criterion was developed by John Kelly at Bell Labs. It has been proven to maximize the portfolio growth over time compared to any other strategy.
It is rumored that Warren Buffett and Bill Gross use Kelly Criterion or some modified version of it.
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