Value Investing: The Earlier the Better?

The answer is YES! No intention of keeping you on the edge of your seat – sit back and relax while I explain.

What is value investing?

Before discussing our topic, we must first learn what value investing really is

As defined by Investopedia it is “The strategy of selecting stocks that trade for less than their intrinsic values”.

Simply put, value investing is the art of buying investments for less than what they are worth. But why is it considered art? In today’s world, Google can give you the price of a stock in a nanosecond, what is so artful about that?

You need to understand that the price of a stock has nothing to do with its value, Determining the value of a company can only be done by deep-diving into its past, present, and interpolating its future businesses, but there is a catch, the essence of a value investment approach is contrarianism, or going against the herd in choosing that company.

“Price is what you pay, and value is what you get!!”- Warren Buffet

Is Value Investing dead?

If you assume it’s dead, you are dead wrong! In fact, the fortuity for value investors has seldom been more compelling than it is today. Perhaps the assumption made by people on it being dead comes from the number of clickbait articles attacking value investing invading the internet.

Unlike popular belief, value investment is hardly ever found where there is a crowd, a trend will artificially raise the point of equilibrium rendering the price high and the value low, Value investment is more often than not, found where others are not looking.

As a matter of fact, value investing is a pursuit of tarnished gems, going against the popular grain. That being said, real value investing will never die, it’s actually more alive than it has ever been.

“We know from experience that eventually the market catches up with value. It realizes it in one way or another.” Benjamin Graham 1955

A Potentially Effective Value Investing Strategy

“Set it and forget it” is a mindset adopted by successful value investors. Long-term investments are more likely to yield higher gains. Researchers suggest that investors who adopt long-term, value-oriented strategies achieve better returns than those who adopt short-term strategies.

People who are under the false impression that value investing does not require a great deal of skill and vision usually end up shooting themselves in the foot. One astonishing example would be Sir Isaac Newton, his one shot at value investing was a failure.

Benjamin Graham, a highly successful investor, and Warren Buffet’s mentor said that virtues such as courage, self-discipline, and patience are the essential ingredients of long-term investing success.

Does Sustainability Affects Company’s value?

It goes without saying that AVID promotes for sustainability in its investments. Our researches show that sustainability is key for value creation.

Investing in businesses that make sustainability their core business strategy means choosing companies that did their research. It means choosing companies that managed to hop on this new opportunity by taking into consideration new legislations and intriguing market changes into their strategies.

There is considerable evidence that sustainable investments engineered from the top down in a firm can have a profitable impact on the firm’s stock price and overall value to shareholders.

The coronavirus crisis permanently changed the way people behave and affected their willingness of risks – taking. Yet, if value truly has become irrelevant in the modern world, then investors should at no point care what return they are making on a company – we would suggest that argument is a stretch.