When searching for good stocks to invest in, it can be a difficult task to decide which stocks are cheap or expensive. Undoubtedly, it can be a difficult task for those who are new yet interested in value investing.
Value investing is still going strong today, despite the roller-coaster ride of the market since the 2000s and even throughout the last few volatile years. This raises a question, how to succeed in value investing? You do not have to be a Joel Greenblatt nor Warren Buffett to make value investing work for you.
Here are 3 tips in investment strategies that can help you learn to pick as well as manage the right stocks that can earn you money over the long term.
Follow your Passion
Buying stock in a company that interests you is one of the best things to do in value investing. In simple terms, either you like how they conduct their business or you have a personal interest in what they do as a business. When you have an interest in their product/service, you prove that there is a sustainable market share for this company.
“What is your personal experience buying their products or using their services?”
Warren Buffet said “buying the stocks of outstanding companies at a sensible price is always a better choice as compared to the rock-bottom stock of a generic company.”
Know When to Buy
You are required to do research way ahead of time if you want to be ready to buy when the price is right. This means understanding all about the business philosophies of key executives, future earnings, fundamentals, and valuations.
Having the knowledge of a business inside out gives you a competitive edge in the market, by knowing how low the value will dip can allow you to make a good move. However, no one has the power to clearly read the future, so margin-of-safety value investing concept provides a benchmark for making wiser choices.
Patience Is the Ultimate Key to Value Investing
If you really want to succeed with value investing, you are advised have patience, patience, and more patience. Most of the times you will have to wait for a long time before seeing your picks fall below the magic entry number that you have chosen. When the stock’s price start moving up, you’ll profit and sell your winners only when they are crazily overvalued.