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Why Value Investing Could Be Your Secret to Long-Term Wealth
Last week, we discussed passive investment using index funds and why this might be appropriate for new and experienced investors looking to simplify their investment process.
This week, we look at value investing, another strategy that originated early in the 20th century.
Let’s delve into the intriguing world of Value Investing. What exactly is it, and how can it transform your investment strategy? Value investing focuses on buying stocks undervalued by the market, believing their true worth will eventually be recognised. This strategy, rooted in the early 20th century by Benjamin Graham and David Dodd, emphasises purchasing stocks at a discount to their intrinsic value, providing a “margin of safety.”
Warren Buffett, a prominent disciple of Graham, has mastered this approach, highlighting the importance of understanding a company’s fundamentals and long-term potential and maintaining discipline through market fluctuations.
Today, value investing remains a key strategy for those seeking superior returns. It involves investing in quality companies with strong fundamentals that are temporarily out of favour. It offers a disciplined method to navigate the unpredictable world of investing.
