Value investing is a long-term investment strategy that focuses on the company itself, and focuses on selecting listed companies whose market value is lower than their intrinsic value .
When the market value of a stock truly reflects its intrinsic value, investors can benefit greatly. This sounds simple, but it is not easy to actually do it.
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What is value investing?
The basic idea of value investing is to buy a company’s shares at a price lower than the company’s intrinsic value and hold them for a long time. When the stock price reaches or exceeds its intrinsic value, investors can make huge profits from the difference.
The most straightforward explanation is that you can buy items of better quality at a relatively low price.
Speculators often buy when the financial market is rising and sell when the market is falling.
Value investing, on the other hand, relies more on investors’ research and analysis of the company itself, and will usually make buying and selling operations that are different from those of most investors.
Therefore, value investors often need to research the fundamentals of listed companies, such as price-to-earnings ratio , price-to-sales ratio , debt-to-equity ratio , etc. These data can often be found in major brokerage firms. For example, Futu Moomoo provides important information such as financial statements and price-to-earnings ratios for each stock.
The concept of value investing was first proposed by Columbia Business School professors Benjamin Graham and David Dodd in their 1934 book “Security Analysis”, which provided a different judgment point for opening a position and making deposits from the traditional one.
Later in 1949, Graham mentioned this concept again in his other works and popularized it, gaining recognition from many investment elites.
This includes the recognition and compliance of Graham’s student, the famous investment guru Warren Buffett. In his subsequent investment journey, he added personal characteristics to the initial concept of value investing and obtained considerable personal benefits.
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