Visit http://www.donkeystock.biz/ or https://www.facebook.com/donkeystock/ to learn more.
Instead of chasing future growth and future stock returns, deep value investors look for undervalued stocks with a large margin of safety between value and price.
It’s about the price you pay
The price you pay determines how well you do. When a company is so deeply undervalued, your risk of losing money is lower and your odds of getting a sizable return is higher. There is a reversion to the mean.
Don’t expect a superior business
Deep value companies have rather fair business models instead of a fantastic business model as a deep value investor is less concerned about wide economic moats and sustainable future growth than stock valuations.
Don’t expect superior management
The company’s management team may not be the best in its industry because the most talented people usually run the best companies. But what’s more important is that the management must still be aligned with your interests as a minority shareholder in order for you to unlock your value in the company.
Look for companies with low debt
A company struggling with debt usually means its business is unprofitable and burning cash just to survive. Besides it increases your risk,
Diversify your risk
You don’t want to concentrate all your capital in just a few deep value stocks. Your portfolio allocation should be diversified into a good number of stocks to spread your risk out.
Be patient
Don’t expect the market to be efficient in the short period of time. But when it does, stock prices will ultimately move up and earn you a nice return.
In short, investing is more an art than a science and there is no point in arguing which method is superior. As for value investors, the most important thing is to beware of “Value Trap”
Source: The Fifth Person
Created by DonkeyStock | Jan 04, 2024
Property investing by these visionary Singapore-based companies
Created by DonkeyStock | Jan 03, 2024
Discover the factors behind this surge, the challenges faced by top cocoa producers, and the ripple effect on chocolate manufacturers
Created by DonkeyStock | Aug 15, 2023
Created by DonkeyStock | May 03, 2023
Companies listed on Bursa Malaysia with an outstanding quarter results for the month of Apr 2023.
Created by DonkeyStock | Dec 07, 2022
stockmanmy
the most important thing is to beware of “Value Trap”....but no test proposed to tell ahead of time.
2017-02-13 08:48