Value investing

There are different Stock Investing strategies

Some of them are
(1) Value investing
(2) Growth investing
(3) Income investing
(4) Contrarian investing

Would like to start with my favorite one

Value investing:

*Value investing is like buying X’mas cards in the month of January OR buying clothes during a New Year Sale. You need to have patience and wait till the sales cycle hits a low and then start your purchases.Similarly in the stock market, we need to buy when the charts (based on price/volume/other indicators are favorable). Stocks work the same way. Clothes go on sale several times a year. However stocks will not be on sale at predictable times of year lIn general, most of us tend to buy in a Supermarket sale. However when it comes to stocks, most people panic/have fear when stocks are on sale. If you’re willing to do the detective work to find these secret sales, you can get stocks at bargain prices that other investors will be oblivious to.
*In value investing, you buy when prices are low relative to fundamentals (Eg: earnings and book value and then wait for prices to go up).
*Value investing is you buy low and sell high. Buy in panic and sell in mania
*A value investor should spend more time at the beach than at the office
*Value investing does somewhat better during down market times and does not appreciate more during up-market months
*Value investing, by its very nature, is about the gradual appreci- ation of capital.
Value investing is a comprehen- sive investment philosophy that emphasizes the need to perform intense fundamental analysis, pursue long-term investment results, minimize risk, and, above all, resist herd mentality.
*Along with reduced trading mistakes, a patient Value investment approach minimizes transaction costs.
*Value investor needs to be disciplined, patient, have cash, not greedy in leverage, have humility. Just as it is silly to think that a fundamentally sound business can lose 15 per-cent of its value in a single day, the same thinking is applied to stock prices that experience extreme bouts of price volatility.
*Value investor needs to buy stocks when undervalued and sell when overvalued
*Value stock outperforms growth stocks over a long period of time
*Value investing relies on fundamental analysis value
*Value investors are bargain hunters
*Most stocks follow“regression to the means”. Hence Value investors do well in their investments

Value investing must be based on an assessment of the relationship between price & value
*In Value investing, the Asset grows in value when you hold it. An asset will continue to put money into your pocket
*In Value Investing, Profit is made when you buy the stock at the correct price.
Skills required for a Value Investor are
① Basic accounting and finance (understanding)
② Understand statistics and probabilities
③ Most important field to understand is psychology
④ Common sense, Patience, money to invest, Discipline to say no and Investing during maximum points of pessimism.
⑤ Good search strategy. There are hundreds of publicly traded securities atthe investorsdisposal. Knowing where and how to look are of crucial importance in order for value investors.An effective search strategy that includes regularly checking up on the Portfolio holdings of experienced investors can be angood source of ideas.
General undervalued investments arise from two situations: market prices below private sale value or buying growth businesses at reasonable prices. Both situations allow for an investment to be made at prices suffi - ciently below intrinsic value
*Before investors can be truly successful at investing during periods of maximum pessimism, they need to be wired with the characteristics of the value approach: patience, discipline, and risk aversion. Pessimism during market crash/correction leads to lower security prices, which offer investors the likelihood of finding more bargain investments and thus the greater chance for future capital gain.
*The key characteristics of the value approach rely more on investors’ temperament than on their level of intelligence.
*Unlike speculators who strive to achieve rapid gain, value investors strive to limit capital loss.
*The greatest advantage, of course, comes to the patient investor who can purchase common stocks of quality businesses at a substantial discount of the present value of those future cash flows, often referred to as intrinsic value
*Value Investors get excited when equity prices are declining.They tend to find great bargains in unloved areas of the market.
*Value Investors think about the probability of capital loss before thinking about the capital gain. Capital preservation is very important for Value investors.
*Value investors invest in any type of market as long as the ability to buy an asset for less than its intrinsic worth exists with a comfortable margin of safety.Bear markets offer greater opportunity to find such investments, but not the only opportunity.
*Value investors avoid the herdlike mentality that occurs in the stock market. They avoid participating in market manias, fads, or any other hot investment of the day. They avoid investment areas that are the crowd darlings.
*Value investing requires a flexible and multidisciplinary mind.
*Businesses selling below book value are not automatic homerun investments. Unless you delve deeper into the financial statements, a company’s book value may not be as sound as it seems. • Understand that the mind is prewired with tendencies that can be hurtful to an investor. Investors should strive always to go back and ask them- selves what could go wrong before making any investment.
*Every investor makes mistakes. The key is to realize those mistakes and prevent them from occurring again and again. • Value and growth are two sides of the same coin to value investors. The greatest creator of long-term value is earnings growth. • Investing in growth-at-reasonable-price businesses does not always mean investing in low P/E businesses. Some of the best value opportunities lie in temporarily unprofitable enterprises
*Value investors like to explore industries currently suffering from lack of interest in the market due to a temporary set of problems.
Buying stocks at bargain prices gives you a better chance at earning a profit later when you sell them. It also makes you less likely to lose money if the stock doesn’t perform as you hope. This principle, called the margin of safety, is one of the keys to successful value investing
Value investors implement the same sort of reasoning. If a stock is worth $10 and you buy it for $6.6, you’ll make a profit of $3.4 simply by waiting for the stock’s price to rise to the $10 it’s really worth. On top of that, the company might grow and become more valuable, giving you a chance to make even more money. If the stock’s price rises to $11, you’ll make $4.4 since you bought the stock on sale. If you had purchased it at its full price of $10, you would only make a $1 profit. Benjamin Graham, the father of value investing, only bought stocks when they were priced at two-thirds or less of their intrinsic value. This was the margin of safety that he felt was necessary to earn the best returns while minimizing investment downside.
Value investors only care about a stock’s intrinsic value. They think about buying a stock for what it actually is - a percentage of ownership in a company. They want to own companies that they know have sound principles and sound financials, regardless of what everyone else is saying or doing.
Value investing is a long-term strategy - it does not provide instant gratification. You can’t expect to buy a stock for $70 on Tuesday and sell it for $95 on Friday. In fact, you may have to wait years before your stock investments pay off.
*Value investors must have the patience and diligence to stick with your investment philosophy even though you will occasionally lose money.
Value investors never hold on to a stock forever. They sell when the valuation gets too high