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.

Site’s Value Investment Fund’s 2020 Return: 35.46%     Current Year To Date 07/23/21 (204 Days): 39.43%

Dow Jones Industrial Average Return for 2020: 6.02%                                   Dow Jones Industrial Average Return Year to Date (2021): 14.56%
S&P 500 Return for 2020: 15.28%                                                                   S&P 500 Return Year to Date (2021): 17.45%

S&P Composite 1500 Return for 2020: 15.01%                                               S&P Composite 1500 YTD: 17.39%
Russell 2000 Return for 2020: 18.5%                                                               Russell 2000 Return YTD: 11.89
%

Value Investing

Value Investing

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 6 – 3.2X Dow Jones Industrial Average

      Value Investment Fund Status Week 6 - 3.2X Dow Jones Industrial Average
      During the week ending December 5, 2020, the Value Investment Fund reports a 3.88% gain in one week. Whereas the DOW only reported a 1.2% gain. Thus, as happened multiple times this year to date for the fund and during Year One of the fund; the fund simply outperformed the DOW Jones Industrial Average. Why? Quality ...
    • Value Investment Fund – Status on November 30, 2020

      Value Investment Fund - Status on November 30, 2020
      On October 31, 2020, the Investment Fund’s balance was $95,641.24. During the month of November, the DOW Jones Industrial Average increased 11.7% from 26,502 to 29,603. This fund, increased 19.79%. This is a reflection of why quality stocks are superior when a market wide recovery occurs. Review the first principle of value investing – risk ...
    • Value Investing – Principle #2: Intrinsic Value (Lesson 7)

      Value Investing - Principle #2: Intrinsic Value (Lesson 7)
      Intrinsic value is just one of the four principles of value investing. Intrinsic value sets the floor price of the investment; i.e. it is an automatic buy. Any price higher than this intrinsic value must be substantiated by other value investing criteria. In effect, other criteria may increase the buy point upwards of 20%. Intrinsic ...
    • Value Investing – Principle #1: Risk Reduction (Lesson 6)

      Value Investing - Principle #1: Risk Reduction (Lesson 6)
      With value investing, steps are taken to dramatically reduce potential financial losses. Risk associated with financial loss is addressed through three important practices. The first and best defense against losses are the type of stocks purchased. Only the best are considered with value investing. The first section below explains this in more detail and illustrates ...
    • Value Investment Fund – Fund Status 11/21/2020

      Value Investment Fund - Fund Status 11/21/2020
      This is Week 4 of the 2nd year of the fund’s existence and it has already increased $16,123.95 of the $30,000 goal for the entire year. The $359 (.3%) increase over Week 3’s ending balance reflects the stagnant activity in the market as a whole. During this past week, the DOW Jones decreased by 1.37%. ...
    • Value Investing – Primary Tenet of Business (Lesson 5)

      Value Investing - Primary Tenet of Business (Lesson 5)
      With the stock market, buying low and selling high is the goal for any investor. But the real problem, and it is depicted well in the illustration above, is knowing when the lows and highs exist. If you purchase the stock at its absolute lowest point in a cycle and then sold it at the ...
    • Value Investing – Holistic Approach (Lesson 4)

      Value Investing - Holistic Approach (Lesson 4)
      There are several underlying elements that make value investing so successful. Value investors cover all the respective elements no differently than how many people thoughtfully resolve problems. An holistic approach towards investing is utilized. This refers to to gaining an understanding of the respective industry and its members; i.e. understanding what makes the pool of ...
    • Value Investment Fund – Fund Status 11/14/2020

      Value Investment Fund - Fund Status 11/14/2020
      This is Week 3 of the 2nd year of the fund’s existence and it has already increased $15,764.75 of the $30,000 goal for the entire year. The $11,913 increase over Week 2’s ending balance reflects the significant change related to both pools tied to the market’s recovery during the same time period. In effect, the ...
    • Value Investing – Market Fluctuations (Lesson 3)

      Value Investing - Market Fluctuations (Lesson 3)
      There is a hierarchy of forces that drive stock market fluctuations. Economic wide forces have the greatest impact overall. There are many different economic wide drivers of downward pressure or indicators of expansion. They include: 1) Federal Reserves’ interest rate adjustments that occur multiple times per year; 2) Acts of law by Congress; 3) Consumer ...
    • Value Investing – Risk Aversion (Lesson 2)

      Value Investing - Risk Aversion (Lesson 2)
      Value investing does require some volatility with the market in order to have opportunities to buy low and sell high. A static market, even one with level growth will not work with value investing. Fortunately, the market isn’t stable and volatility does exist. This volatility is driven by multiple forces: politics, interest rates, consumer patterns, ...