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 then 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 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 500 companies worldwide. Absolutely avoid penny and small cap financial instruments. Secondly, value investors rely on intrinsic value to set the buy/sell range of market price for the respective stock. In addition, value investors use financial analytics to validate operational and financial performance. Finally, patience is required. Time is on the value investor’s side.

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 Investing – Definition, Core Tenet and Principles

      Value Investing - Definition, Core Tenet and Principles
      The definition of value investing is elusive, more so because it is more of a concept than an actual formula or derivative. It goes beyond just owning stock at a good price, i.e. trading less than intrinsic value; it also refers to selling stock when the market price exceeds a reasonable value for the stock. ...
    • Purchased 114.9557 Shares of Union Pacific

      Purchased 114.9557 Shares of Union Pacific
      From the Lessons Learned article posted a few days ago, in order to gain higher returns, the investment model needs to have greater dispersion with my buy/sell trigger points in its model. Last year, the buy/sell triggers for Union Pacific were a 17% market price decrease from the prior peak and to sell at 100% ...
    • Purchased 98.2849 Shares of Norfolk Southern

      Purchased 98.2849 Shares of Norfolk Southern
      This morning at the market opening, the railways pool of the Value Investment Fund purchased 98.2849 shares of Norfolk Southern at $202.49. Altogether, including transaction fees of $1 per share, the fund invested $20,000. This post also explains that the dispersion values increased from 8% decrease in price from prior peak to 10% decrease. This ...
    • Purchased 606.9803 Shares of UDR, Inc.

      Purchased 606.9803 Shares of UDR, Inc.
      At close of business today, 10/26/2020, the REIT pool of the value investment fund purchased 606.9803 shares of UDR, Inc., United Dominion Realty Trust, at $32.95/Each including transaction fees of $1 per share. This post explains the buy/sell trigger points for UDR, Inc. There is also a link to explaining the concept of PUTs.
    • Purchased 382.336 Shares of Equity Residential

      Purchased 382.336 Shares of Equity Residential
      When selling PUTs in the market, value investors cover their position by purchasing a similar position in an existing low price to book stock. In effect, the position acts as a bank account in case the PUTs are activated, thus the existing stock is sold and the proceeds are used to cover the PUTs financial ...
    • Sold PUTS on Railroad Stocks

      Sold PUTS on Railroad Stocks
      Today, I sold 59 PUT options for Union Pacific with a strike price of $170.00 with a final date of February 19, 2021. I’m simply selling insurance that if the stock price drops to $170 per share, I will have to buy them from the owner of the puts. Today, the PUT for $170 is ...
    • Purchased 192.123 Shares of Equity Residential

      Purchased 192.123 Shares of Equity Residential
      This post is to record the value investing fund’s purchase of 192.12296 shares of Equity Residential, a real estate investment trust (REIT) for the value investment portfolio.  As a result of my ‘Lessons Learned’ article that will be completed and posted this week, I had to broaden my portfolio and include a counter cyclical portfolio of ...
    • Value Investing CRUSHES the Dow Jones Industrial Average by 353%!

      Value Investing CRUSHES the Dow Jones Industrial Average by 353%!
      On October 22, 2019 the Dow Jones Industrial Average was 26,823 (market opening). Today, October 18, 2020 the Dow Jones Industrial Average is 28,607. The DOW improved 6.65% in the course of one year (technically 361 days). On October 22, 2019, I started out with $10,000 in a value investing based railroad fund. Today, the fund ...
    • Sold 49.060606 Shares of Norfolk Southern Railroad for a 14.97% Annual Gain

      Sold 49.060606 Shares of Norfolk Southern Railroad for a 14.97% Annual Gain
      On 09/14/2020, Norfolk Southern’s price hit $220.13 at opening. I set my sell point via an automatic sell at $219.88 and thus the shares automatically sold at $220.13. After paying a $1 per share fee, the railroad fund that I write about on this site generated $10,750.65. My cost basis in them was exactly $10,000 ...
    • Railroad Fund Status July 31, 2020

      Railroad Fund Status July 31, 2020
      Railroad stock offers good upside potential with very little risk involved. This particular test fund is outperforming the DOW Jones Industrial Average by a factor of three. Learn about value investing from this series of articles.

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