Value investing is a simple concept, unlike other investment strategies. If you have enough patience, money to invest and a basic understanding of stocks you can become a value investor. To get started with value investment you need to understand these principles.
All Companies Have Intrinsic Value:
When you consider buying a stock always remember that every company have intrinsic value. So, when you know the real value of something, you can save a lot by purchasing the stocks, not in the actual price but the sale price.
Value Investors don't believe in the Efficient Market Hypothesis:
Stock prices always reflect the company's value is called the Efficient Market Hypothesis. However, the value investors believe that shares are sometimes overpriced and underpriced relative to the company's real value. Theyto understand the market better. Never jump to conclusions only from the information gathered around the stock and news websites.
Successful Investors always stand different:
They don’t follow the herd of ordinary investors. When everyone is selling, most of them choose to buy or hold. When others are buying, they often stand back or sell. Value investors believe in sectors that offer valuable products to consumers can recover from the setbacks if their fundamental remains string.
Always Have a Margin of Safety:
Try buying stocks at bargain prices. This way, you can earn a profit when you sell them, and you will not lose much when the shares don't perform as you expected. This principle is called Margin of safety.
Patience and Diligence is the Key:
Value investing is a long game and patience is the key. Waiting years to sell your shares is a good move, and also they are taxed at a low rate compared to short term gains.
I hope it helps!