There are many forms of investing out there. You might have heard of value investing, technical analysis, forex trading or options strategies, etc. There are tales of how people earn big money from any one strategy. There seems to have hurricane of information out there on the internet. With so many information out there, where should I start?
If you look into the mirror and find yourself looking like that, don’t worry. Today, journeywithmoney wants to introduce to you a style of investment that we specialise in. That is value investing.
Background Story of Value Investing
Value investing is made famous by one of the most celebrated investor in the world, Warren Buffett. He has used this strategy and able to make on average 21.7% returns every year (from 1967 to 2014). This is a far cry from investing in S&P500 which gives around 9.7% returns. 21.7% is indeed very commendable as it is a consistent return. Have you heard of stories of people getting 8% returns a day only to find out that he/she has got burnt in the stock market? To achieve 21.7% consistently over 40 years is indeed commendable.
What is Value Investing?
Value investing is an investment strategy where stocks are selected below their intrinsic values. Value investors seek stocks they believe is undervalued. Value investing in the most simplest sense can be summarized into 2 simple steps. First of all, we need to identify a good company. We want to select a company that has a economic moat so that it will be around for the next 10 years. Good business are hard to come by. In the world where 90% of the startup fail, we want to identify good companies so that they can continue to make us money in the long run.
Then we have to buy the good company at a sensible price. Imagine there is a bag that you always wanted. You are only willing to pay $300 for this bag. If it is priced at $3000, you probably will not want to buy it even though it is really nice. However, it is priced at $200, you probably will think it is a great discount and wouldn’t mind buying it. We can apply this in the stock market. If we think that Starbucks is a good company, we would want to put it into our shopping list. Let’s assuming we are willing to pay $50 to buy Starbucks stocks. If it ispriced at $100 now, we wouldn’t want to buy it. We will wait until the price is below $50 before buying it.
Where can I start?
There are many investment styles out there. We focus a lot of value investing because it has been proven to be a good strategy over the past 90 years. Many people ask where they can start reading up on value investing. While, it will be good to read up. Most of the time, it will lead to information paralysis because there are just too much information out there. One way you can start is by reading our website or you could join in our events to learn more.
Click on value investing bootcamp if you want to jumpstart your investment journey.
Wishing you all the best in your journey with money.
In Journey with money, we want to empower individuals to retire early and avoid financial pitfalls such as this. Such a financial pitfall will delay retirement by at least a decade if not forever. If you already have done financial planning (singapore) or have a financial planner, that’s fantastic. You should be proud that you have taken the first step. However, there are many still unaware of this. We will like to offer our readers (even if you have a plan already or not) a free review by our in-house Financial Planner. He will cater a uniquely designed portfolio for your specific needs and your journey with money.
Feel free to leave comments below or contact him at firstname.lastname@example.org
If you would like to read more about value investing, below are some books that we recommend: