Value investing – An intelligent way to trade in stock market

Value investing is the concept of buying share when its price undervalues its inherent worth.  In simple words, Buy a stock when it’s low and sell when it is high.  Indeed, Value investing is one of the best stock picking method by longtime.  Investors who desire to finding good deals then they need to consider about value investing. Foundations of value investing basically lay by Benjamin Graham and further continue and developed by his followers. Often, inexperienced investors faced two major problems before tried out for value investing; first is, they didn’t know enough regarding stocks and second, they felt stocks remains too risky thing.

When someone get deep familiarity about companies and their stocks and understands nature of companies then that can easily execute trading.  In addition, It’s a way of investing in a worth company that we assume is undervalued. In value investing, we invest in a hope that undervalued stocks in the current market but will become stronger in the future. In fact, value investing provides an opportunity to buy share on its low price to earn good profit in the upcoming days.  Value investors must know the basics such as cash flow, dividends, earnings growth and book value, all these things create major impact on a stock’s value than market factors.  In case, you think that your basics are clear or you are going in a positive direction, and still stock’s price is below its obvious price than the value investor realize this is a probably investment candidate, market has wrongly the stock value. When the market resolves its mistake the stock’s value should likely to a boost up. Undoubtedly, Value investing is an intelligent way to trade in the stock market.

There are several basic principles of value investing:

 Do your research- in the research, one need to examine the company’s history and current status before buying any share.  Indeed, you need to understand its long-term strategies, its financial structure, its consistency and its business ethics.

Diversify- do not depend on a single stock and company, its means just invest in various stocks of diverse companies to avoid sudden loss. Indeed, diversification of money in stocks matters always. Intelligent investors never put their whole money in single stocks. 

Seeks safe and steady returns- in 21th century, everyone want to make quick money. But, in stock market sometimes this attitude leads to face losses. Thus, instead of this approach, first understand the market temperament and then seeks of consistent returns, year after year.

Stick With your knowledge- buys those companies share which you know better or you feel confident about them. In this way, investors can reduce their risk percentage to losses. Simply, if you don’t aware about that particular stock then don’t invest.

Small identity, big caliber- nowadays, everyone wants to invest in big things, in hope of greater returns.  Always seeks for companies that might sell for less than they are actually worth. However, at the end such companies get success and secure the good returns. Sometimes, big name doesn’t deliver than we expected.

 A Weak Link- sometimes companies drag down its performance due to unprofitable situations. If the company sells or closes at that situation, its financials can get better spectacularly. Hence, investors who are able to indentify this position of the company then they can purchase the stock while its price is low and could see gains subsequently.

Long-lasting Demand- companies whose product and services are in demand for the longtime are expected to continue to be in demand in future as well. Hence, determine such companies to get benefit in short time.