Value investing in India:There are many successful strategies in the stock market. learn share market However, three of the most popular investing strategies are- Value investing, growth investing and dividend investing. It’s really difficult to say which one is better as it totally depends on the investor’s knowledge, style, and preference.
Nevertheless, value investing is one such proven strategy that has created huge wealth for many investors who have followed this strategy with discipline. In fact, one of the biggest followers of value investing is the legendary investor, Warren Buffett.
What is value investing?
The basic strategy of value investing in very simple.learn share market You find an amazing company, calculate its true (intrinsic value) and pay a lot less to purchase the stock (when it is on sale in the market). As you have bought the stock at a discount, you can make a profit by selling the stock when the price reaches its true value.
Few common tools that value investors use in order to find undervalued stocks are- lower than average price to book value, a low PE ratio or higher dividend yields.
Although value investing is a very old strategy of investing in stocks,learn share market however more than anyone else. Benjamin Graham is credited for popularising this concept. Graham developed the value-investing philosophy after surviving the great depression of 1929-30s -when the Dow lost an unbelievable 89% over a three-year span.
Like Graham, Warren Buffett also looked for undervalued learn share market companies that have steady cash flows driven by straightforward models. Buffett’s company- Berkshire Hathaway has generated an average annual return of above 22% for more than 50 years, making Buffett one of the richest people in this world.
Does value investing in India works? learn share market
Yes, Definitely!! Tell me one thing- If I offer you to purchase a brand learn share market new iPhone X at a discount of 50%- Isn’t this deal profitable to you? Even if you don’t plan to keep the iPhone, still you can sell it for a price way higher than your original purchase price. There are a number of online websites like Olx or Quickr where you can easily find a buyer for this phone.