How Do I Start Value Investing?

Question

I am very interested in learning the Ins and Outs of value investing. I understand the underlying concepts but i feel like i am not sure where to start and actually get my hands dirty.

In some ways i feel as if i should be studying accounting rather than investing?

Can anyone give me some pointers or resources i can check out?

Thank you very much.

Answer 1

Resources? Okay.

Answer 2

Hello,

You should start by read as much as you can

Here are a few books:

The Intelligent Investor by Benjamin Graham
Value Investing: A balanced Approach by Martin Whitman
Value Investing: From Graham to Buffett and Beyond by Bruce Greenwald

Aswath Damodaran, A highly regarded professor at the Stern School of Business has also written on this subject. He wrote a very informative publication called " The Different Faces of Value Investing." This is a pdf file that can be found on his website at Stern.


I hope this helps.

Michael Weiss
The Editor
The Mutual Fund Investor
http://www.mutualfundinvestor.net

Answer 3

Well, I suppose you know the most famous value investor-Warren Buffet. Read his shareholder letters, available at berkshirehathaway.com Of course there are many books on his approach. If you do get into the accounting, keep in mind you want to have predictable and durable earnings over a long time. Companies that have market share that people are emotionally connected to. Do not neglect the opportunity to let Berkshire do some value hunting for you as well, as you look through value line( free at most libraries) or do internet screen searches.Buy some 'B' shares of BRK.B

Answer 4

My approach:

1) Look for good companies that have had their share prices hammered for no reason, or strong companies with great long term prospects that are being beaten down because of short term worries.
2) Look for strong companies with strong brands or other features that make them difficult to compete with. For example Harley Davidson and Apple Inc have tremendous customer loyalty which allows the companies in question to charge more for their products.
3) Avoid commoditized businesses (where the company makes a product that anyone else can easily manufacture and where strong brand loyalties don't exist) like the plague.
4) Don't automatically write off companies with high P/Es. Look for companies that may be creating major new revenue streams in the near future.
5) Look for companies with a lot of cash and no debt.
6) Be a futurist--try to figure out where the world is going and how to make money off of it.

Good luck.

Answer 5

Value investing is simple and also one of the safest investment stratagies.
1. Choose large, conservative, profitable companies that pay dividends.
2. DIversify your sectors.
3. Invest for the long term.
4. Reinvest your dividends.
5. Re-evaluate your investments periodically
6. If one of your investments happens to go down, don't panic; it happens often, nothing keeps going up forever.