“Investing is most intelligent when it is most businesslike” These nine important words probably summarizes in a nutshell the value investing theory.
What is value investing and why do I insist that it is the best strategy to use when investing in the stock market?
The principles of modern value investing were conceived by a Benjamin Graham, known today as the Dean of Wall Street and the father of value investing. Although Graham did not have a name for his stock market investing strategy, it was later on called as “value investing” by his disciples. The core principles of value investing is embodied in Benjamin Graham and David Dodd’s book “Security Analysis” and Graham’s book “The Intelligent Investor.” Both books are widely recognized by stock market experts and regarded as sacred text by value investors worldwide.
I say that the above mentioned quote summarizes the value investing theory in a nutshell, because it the simplest explanation of the value investing concept. Value investing is nothing more but intelligent investing and investing is most intelligent when it is most businesslike. Once a stock market investor approaches stock market investing from a business perspective he will surely make rational and intelligent decisions.
Value investing has taken many forms since its inception and flavors of different types of value investing vary depending on each value investor. However the core concept of buying shares of stock whose shares appear under priced by using some form fundamental analysis remains a key concept regardless of what flavor of value investing is being used. Buying shares below their intrinsic value with a sufficient margin of safety also remains to be a key concept in value investing.
I believe that value investing is the best investing strategy when investing in stocks. Using a value investing strategy will help you survive in the roller coaster ride of the stock market and will help you avoid getting uncessary a Best Offset Mortgage. Let me give you five reasons why I use value investing in stock market investing and why you should become a value investor yourself.
1.) Logical, no-nonsense approach
The value investing approach is the most logical, no nonsense approach in stock market investing and uses a lot of common sense. When you start learning about value investing the first thing that you notice is that it makes lots of sense. No fancy gimmicks and computation and no unnecessary unreasonable risk. I mean think of it, if something you want is worth a dollar and somebody offers to sell it to you for 50 cents wouldn’t you buy it, this as simple as it gets. The value investing concept is similar, find companies that sell for less than how much it is worth and buy tons of shares! This makes a lot of sense right? This is what every businessman would do.
Value investing is simply investing from a business perspective. Benjamin Graham captures the essence of this point in his very own words.” Investment is most intelligent when it is most businesslike. It is amazing to see how many capable businessmen try to operate on Wall Street with complete disregard of all the sound principles through which they have gained success in their own undertakings. Yet every corporate security may best be viewed, in the first instance, as an ownership interest in, or a claim against, a specific business enterprise. And if a person sets out to make profits from security purchases and sales, he is embarking on a business venture of his own, which must be run in accordance with accepted business principles if it is to have a chance of success.”
See you next post on Part 2 of the “Reasons why you should use value investing when investing in the stock market”
Hi ! my name is Zigfred Diaz, Thanks for visiting my blog where you can learn stock market investing the Warren Buffett way and using other value investing methods ! Never miss a post from this blog. Subscribe to my full feeds for free. Click here to subscribe to The Polymath Investor by Email