To the 1st Chapter of Value Investing Course
“Let’s Start Investing”
What Is Value Investing
Value investing is an investment strategy that involves picking stocks that appear to be trading for less than their intrinsic or book value.
In Simple Words, In Value investing we are trying to know the actual price of any stock. It focuses on the value of the company.
Price – Price is what you pay to buy a share.
Value – Value is what you get after selling the share.
Those who know how to find Valuable Stocks in the market are known to be VALUE INVESTORS.
Value Investor is those who invest in Underrated Stocks/Business to get high Returns.
Now the question arises is that How will you become a Value Investor?
There are a few steps to help you in becoming a Value Investor-:
- Buy Valuable Businesses, Not Stocks.
- Passionate To know the Company.
- Invest in Companies You Understand.
- Find Well-Managed Companies.
- Don’t always Go with Flow.
- Ignore checking the Market 99% of the Time.
Buy Valuable Businesses, Not Stocks.
This means Investors not buy stocks depending upon their Stocks trends in market and market unwanted noises. Instead, Investors must look at companies fundamental to that stock. Investors can make money trading trends but it involves much analysis than value investing. Buying and Selling of trends can pay earlier profits.
But value investing gives more profits because good things take time to build.
Passionate to Know the Company
You should not pick a company base on market news. You must love the business you’re buying, you must be passionate to know everything about the company. They look different when you check their price to earnings, price to book and price to share(EPS) ratios.
Invest in Companies you understand
If you don’t understand how the company works then don’t invest in them.This is one of the main reasons for Good Value Investing. You must predict the future of the company according to their products and must check the value they given to their Consumers.
Find Well-Managed Companies.
Management and teamwork can make a huge difference in the company. The biggest asset of a business is its workers.
Before Invest must check these:-
According to Greatest Value Investor Warren Buffett
Don’t Always Go with Flow
Don’t go with the flow in invest never go what people say always do your analysis because it’s your money what you investing.Take more and more time to find the stocks to invest because after that you have to wait and see how your money grows.
Ignore Checking the Market 99% of the Time.
The market only matters when you enter or exit a position — the rest of the time, it should be ignored. If you approach buying stocks like buying a business, you’ll want to hold onto them as long as the fundamentals are strong.
More Important Tips in Value Investing-:
In value investing firstly, we have to calculate the intrinsic value (actual value) of the stock by using the above points.Because sometimes Stock prices are overvalued.
So Why the stock of any company is undervalued or overvalued?
Because in share market the price of any stock is divided by people (peer to peer) sometimes the people overreact with the stocks (emotional trading) because of this the price of stocks fluctuate (it increases or decreases), so the intelligent investor takes advantage of this and makes money because in long term the stock price will come to its actual value and fluctuate according to company’s growth.
Example– In 2008 the financial crises most of the growth-seeking companies also faced losses and their share price became very low (undervalued).
-So, the value investor always waits for the right time like crises, the bubble burst, etc. So they can buy the shares of quality companies at a low price or make a profit in the long term like Warren Buffet, Carlus slim, Radhakrishan Damini, Rakesh Jhunjunwala, etc.
– This strategy is too simple but you have to be patient.
– You can make a lot of money by value investing in crisis and when a country is in recession but the main problem is most people don’t have money in those situations, so remember don’t invest all of your money. Save some money for those situations.
Thanks for Reading….more in the next chapter.
Introduction of Course