Value Investing: Conclusion
  1. Value Investing: Introduction
  2. Value Investing: What Is Value Investing?
  3. Value Investing: How Stocks Become Undervalued
  4. Value Investing: Finding Undervalued Stocks
  5. Value Investing: Finding Value In Financial Reports And Balance Sheets
  6. Value Investing: Finding Value In Income Statements
  7. Value Investing: Managing The Risks In Value Investing
  8. Value Investing: Famous Value Investors
  9. Value Investing: Couch Potato Value Investing
  10. Value Investing: Common Alternatives to Value Investing
  11. Value Investing: Conclusion

Value Investing: Conclusion

Value investing is like buying Easter candy the day after Easter. The candy still has the same intrinsic value – it's still sugary, delicious and essentially as fresh as it was in the days leading up to Easter. But instead of paying full price to buy the candy the Saturday before Easter, when its demand is highest, value investors buy Easter candy the Monday after the holiday, when demand and prices plummet. They recognize that just because a piece of chocolate is shaped like a bunny doesn't make it any less delicious.

Value investors get significant discounts on their purchases by questioning the wisdom of market prices. These significant discounts allow them to not only build in a margin of safety that limits their losses in case their purchases don't work out, but to earn high percentage returns by holding onto their investments until they rise to meet or exceed their true value. Just as they aren't willing to settle for paying market prices, value investors aren't willing to settle for average returns. They believe that if they are willing to do the legwork, they can beat the market. (For related reading, see Finding Profit In Troubled Stocks.)

If you're already a bargain shopper, an independent thinker, a diligent worker and a patient person, you probably have what it takes to become a successful value investor. Value investors commonly do their own research and fundamental analysis, relying on financial statements and metrics such as profit margins, price-to-earnings ratios and book value to pick individual stocks to invest in. If this method doesn't appeal to you, however, you can pursue value investing through other means or try a different investment strategy altogether.


  1. Value Investing: Introduction
  2. Value Investing: What Is Value Investing?
  3. Value Investing: How Stocks Become Undervalued
  4. Value Investing: Finding Undervalued Stocks
  5. Value Investing: Finding Value In Financial Reports And Balance Sheets
  6. Value Investing: Finding Value In Income Statements
  7. Value Investing: Managing The Risks In Value Investing
  8. Value Investing: Famous Value Investors
  9. Value Investing: Couch Potato Value Investing
  10. Value Investing: Common Alternatives to Value Investing
  11. Value Investing: Conclusion
RELATED TERMS
  1. Value Investing

    The strategy of selecting stocks that trade for less than their ...
  2. Relative Value

    A method of determining an asset's value that takes into account ...
  3. Intrinsic Value

    Intrinsic value is the actual value of a company or an asset ...
  4. Margin Of Safety

    A principle of investing in which an investor only purchases ...
  5. Large-Value Stock

    A type of large-cap stock investment where the intrinsic value ...
  6. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure ...
RELATED FAQS
  1. Do you always have to consider intrinsic value when purchasing a stock? Why or why ...

    Take a deeper look at why value investors consider a stock's intrinsic value an important consideration before picking a ... Read Answer >>
  2. What is the difference between intrinsic value and current market value?

    Discover the differences between intrinsic and market values, what makes the former difficult to determine and how investor ... Read Answer >>
  3. What can cause an asset to trade above its market value?

    Learn some of the factors that can affect the price of an investment asset and the major reasons why an asset might trade ... Read Answer >>
  4. What is the difference between a company's book value per share and its intrinsic ...

    Book value and intrinsic value are two ways to measure the value of a company.In simple terms, book value is based on the ... Read Answer >>
  5. What is the difference between book value and market value

    Learn the differences between book value and market value, and see how investors use each type to determine if a company ... Read Answer >>
  6. Why would a value investor consider the Internet sector?

    Learn how traditional value investors are looking for opportunities in the Internet and technology sectors, and understand ... Read Answer >>

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