Value Investing

Value Investing was introduced by Benjamin Graham in his all-time classic book 'The Intelligent Investor'. It has been followed by some of the world's greatest investors since, with Warren E. Buffett as the most eminent.

The main idea of Value Investing(VI) is to buy stocks with very good fundamentals, good profit history, in as low price as possible. The ideal pick for Graham was to buy stocks traded with value less than their Net Asset Value, meaning traded less than what they are worth. With relatively simple methods and stock indexes, the investor can select undervalued stocks of good companies. This is usually done during periods of market correction, however as Graham pointed out, there are undervalued stocks at all times.

Graham separated the investors in 2 types, the Passive and the Intelligent. Passive of course doesn't mean not-intelligent. Their main distinction is the time and effort they devote on selecting stocks. A passive investor can have good returns of his investments as well. But as Graham points out, an Intelligent investor that devotes enough effort, can have better than average return than the total market.

The Intelligent investor will get the best stocks at the lowest possible price. When the market valuates the stocks correctly in the future, then the Investor can get a good capital return. In the meantime he will also be receiving good dividend yield, since he bought stocks of profitable companies at a relatively low price.