Value Investing

A Value Investor believes that the Stock Markets are inefficient and mispriced Stocks. The Value Investor researches and analyses individual stocks that are deemed to be trading below fair value.

There are two main investment avenues, principles or doctrines in Investing, Value Investing and Growth Investing. The core philosophy of a Value Investor is that the Stock Markets are inefficient and mispriced Stocks. The Value Investor will look at the various ratios and the valuation multiples and growth metrics for a Stock. The Value Investor will actively search for disparities between a stock’s multiples and the multiples applied to the ratios for the overall market. Value or “Cheap” Stocks are Stock’s overlooked by many Investors and the Sales and Net Earnings are undervalued. The Value Investor hopes that the Stock Price will rise as other Investors perceive inherent value, true intrinsic value of the Company’s business.

Value Investors will focus on individual Stocks and take pride in their ability to pick Stocks. The focus is on Stocks that are deemed to be trading below fair value based on either Ratio Analysis, Intrinsic Valuations or compared to its Book Value. The Stock Market and individual Stocks overreact to news, good or bad news, leading to a price disparity between a Company’s long-term fundamentals and the Stock Price. A Growth Investor will look for growth. Comparative disparities in ratio multiples are of minimal importance as long as growth momentum continues. A Growth Investor will look for Sales and Earnings growth, valuations are of minimal importance.