Value Investing

Yes! Value investing should be the way to go. What the hell have i been doing with my investment? Serve me right for devaluing my investment portfolio. Anyway, it is never too late to jump back on track. My target is to get back my 20% gain on my current portfolio! It's time to start managing my money properly!

I shall add this topic to remind myself to when i rebalance my portfolio from this year.

Value investing!


Few notes on value investing:
1. Ensure that there is a sufficient margin of safety whose market price is below the company's intrinsic value. This basically means look for undervalued company stocks
2. Selling the stock when the market price reaches the intrinsic value. This is important as you need to have an exit strategy. In plenty opportunities, people don't exit and hence hold on the share through the rollar coaster ride.

So what is the action plan?
1. First look at the value of the company on the stock exchange which is the market price
2. Then look at the company's business value. This business value is the intrinsic value based on its 'real time' value in the event of a merger with a competitor or in a takeover situation. Alternatively, can be considered as dissecting the company and selling all its asset. (?NAV).

Stock prices tends to reflect over or under the business value hence this could be a possible way to mitigate the risk of losing your money and maximizing your gains.

Investment should only be made when the market price is considerably lower than the business value. A MINIMUM OF 40% to 50% below. This difference between the market value and business value is called the 'margin of safety'.

Value investors must demonstrate PATIENCE when growth stocks are most popular among investors. Value stocks and growth stocks tends to alternatively lead the performance statistics.