Value Investing

Value Investing

Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.

The primary tenet of value investing is to to buy low and sell high. If done properly, average annual returns on an investment fund will exceed 30%. Value investing requires the investor spend some time creating a decision matrix for each pool of similar companies. This model is then implemented and updated on an annual basis. Value investing is in effect the exact opposite of day trading. Value investing takes advantage of time and this reduces the overall stress for a fund manager. 

Value InvestingValue investing relies on four principles to ensure success.

The first is risk reduction by only working with high quality stocks; in general, work with the top 2,000 companies worldwide. Absolutely avoid penny and small cap financial instruments. Top companies reduce risk significantly due to their stability of earnings. Stability of earnings is the most important value derivative in business.

Secondly, value investors rely on intrinsic value to set the buy/sell range of market price for the respective stock. Intrinsic value is the core worth of a company. There are several different intrinsic valuation formulas and their application is a function of the company’s business model. There is no single universal intrinsic valuation formula.

In addition, value investors use financial analytics to validate operational and financial performance. This analysis allows the value investor to determine the most likely market price recovery point and its associated time frame to recover.

Finally, patience is required. Time is on the value investor’s side.

Value Investing – Value Investment Club

Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth.

Joining entitles you to the following:

  • Lessons about value investing and the principles involved;
  • Free webinars from the author following up the lessons;
  • Charts, graphs and resources to use when you create your own pool;
  • Access to the existing pools and their respective data models along with buy/sell triggers;
  • Follow along with the investment fund and its weekly updates;
  • White papers addressing financial principles and proper interpretation methods; AND
  • Some simple good advice.

Value Investment Club

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    • Value Investment Fund Status Week 26 – Halfway Point Report

      Value Investment Fund Status Week 26 - Halfway Point Report
      Value Investment Fund Status Week 26 – Halfway Point Report Halfway into the fiscal year and already, the value investment fund has surpassed the desired annual return. When the markets closed on Friday, April 23, 2021; the fiscal year to date return for the fund stands at 51.4%. The annual goal is to earn at least ...
    • Value Investment Fund Status Week 25 – Continued Growth

      Value Investment Fund Status Week 25 - Continued Growth
      This past week, the Value Investment Fund grew 2.7% reaching a new all time high at $148,147 off a $100,000 investment 25 weeks ago. This past week, the banking pool propelled the fund higher with its 5% growth during the week. Wells Fargo and Bank of New York released their financial results from the first quarter. ...
    • Value Investment Fund Status Week 24 – Maintaining Position

      Value Investment Fund Status Week 24 - Maintaining Position
      This past week, the Value Investment Fund grew 2.1% matching many of the major indices in the market. The fund is well ahead of schedule and is on track to surpass 52% return for fiscal year 2021. Driving the unrealized gains are the REITs. This table illustrates how much has accrued since the purchases in late ...
    • Value Investment Fund – Status on March 31, 2021

      Value Investment Fund - Status on March 31, 2021
      The Club’s Value Investment Fund grew dramatically during March 2021. The Fund grew 10.1% driven by increases across the board for all investments. Total actual gain during March was $13,143 as illustrated in the report below. As stated multiple times throughout the lessons and tutorials, high quality stocks have less risk and thus react remarkably well ...
    • Value Investment Fund Status Week 22 – A Fair Return For The Week

      Value Investment Fund Status Week 22 - A Fair Return For The Week
      Anytime the value investment fund improves more than 1% during a calendar week, it is a fair return. This past week, the Value Investment Fund grew 2.2% far outpacing all the major indices in the market. The fund is well ahead of schedule and will surpass 48% return for fiscal year 2021; it is conceivable that ...
    • Sold 104.712 PUTs on Norfolk Southern Railroad

      Sold 104.712 PUTs on Norfolk Southern Railroad
      Within the railways pool of investments for the Club’s Value Investment Fund, Norfolk Southern Railroad is considered one of the better investments of the six existing railroads in the pool (soon to be five with the merger of Canadian Pacific and Kansas City Southern). It is a highly stable company and rarely performs poorly, either ...
    • Value Investing – Monitoring Performance (Lesson 17)

      Value Investing - Monitoring Performance (Lesson 17)
      Monitoring performance is the single best tool to ensure success with value investing. Comparing results against expectations provides the basis for good decisions. In business, this is known as the feedback loop. In effect, a variable input is changed, results are recorded, compiled and reported in a understandable format. Any unexpected results are analyzed and ...
    • Value Investment Fund Status Week 21 – Disappointment

      Value Investment Fund Status Week 21 - Disappointment
      After five of the prior seven weeks with 3.5% or more of growth per week, this past week saw the Value Investment Fund with a disappointing reduction in value of 2.6%. One of the drawbacks of value investing is that, at times, the investor feels like their portfolio just isn’t exciting. But at the end ...
    • Intrinsic Value – Application of Discounted Cash Flows

      Intrinsic Value - Application of Discounted Cash Flows
      Every student of investing is taught the core principle of discounted cash flows. This business principle is also used with intrinsic value. Application of discounted cash flows assists value investors in determining intrinsic value. Academia, major investment brokerages and the majority of investment websites place unquestionable belief in this single formula to equate value for ...
    • Value Investment Fund Status Week 20 – Super Growth

      Value Investment Fund Status Week 20 - Super Growth
      The Club’s Value Investment Fund had the best week, March 13, 2021, this fiscal year-to-date. The Value Investment Fund grew a whopping 6.5%, $8,867 over the prior week’s ending balance. This is all due to the COVID relief package signed into law. Over the past week, the DOW grew 4.0% and the S&P 500 grew ...