Value Investing Strategy: Long Term Growth
Value investing strategies are not for those investors looking to move quickly in and out of stocks on a daily or even an annual basis.
Warren Buffett once said the stock market is a device for transferring money from the patient to the patient.
When you invest in value companies you must invest for the long term and think in terms of years or at least months not days or weeks.
In fact Buffett believes that all short term price movements in the stock market should be disregarded by value investors beyond using them as an indication of the best times to potentially pick up some new holdings.
You should keep in mind that long term investments are normally those that have lower risks rather than watching daily stock prices.
You should spend that time keeping your eye on the operational performance of the companies in your portfolio and rather than allowing market volatility to lead you into a hasty and emotional investment decisions.
You should continue to base your opinions of a company’s value on facts.
You know sometimes it can take a company a long time to see its share price rise to match its intrinsic value.
If you have the time and if you won’t need the money for many years you have a huge advantage over investors with the opposite circumstances.
You can buy perhaps at a discount when they need to sell.
Good companies can traded valuations that seem very low for years.
This can happen when investors attention is focused elsewhere on hot tech stocks for example or when a sector is out of favor.
Even if it takes several years to happen the general principle holds.
The market is usually efficient over the long run and eventually a stock’s price will reflect the company’s true value.
If you’ve bought the stock at a discount you’ll make money or a lot of money if you sell it once its price rises to something closer to its intrinsic value.
Having the patience to wait until that happens is one key to success as a value investor. Make sure you have a long term investment strategy in mind and patience is key to your investment success.