Value investing simply explained -
Always find the right time for your trades
Value investing is an investment strategy that looks at the real, economic value (e.g. buildings, systems, profits) of a company. The aim is to find undervalued stocks that have a high probability of positive development.
The economist and investor Benjamin Graham (1894–1976), who wrote the book together with David Dodd in 1934, is considered the founder and father of value investing Security Analysis published, which is still considered the standard work of value investing today.
"Buy 1 dollar but don't pay more than 50 cents for it"
Benjamin Graham, 1894-1976
Benjamin Graham is looking for companies that can be bought on the stock market at a lower price than the company is actually worth.
A key figure that he uses for the evaluation is the price-to-book ratio (KBV). The P / B is calculated by dividing the current share price by the book value per share. The book value is obtained when you add the cpl. Adds up company property (machines, buildings, computers) and subtracts the debts. With a P / B below 1, you could theoretically buy the company for less money than it is worth according to the balance sheet.
Value investing is an investment strategy that has been tried and tested for more than 80 years.
Warren Buffett was a student of Benjamin Graham and is the world's most successful investor. In the years 1965 - 2015 he was able to achieve an annual return of +19.2 % with this strategy. The S&P 500 Index, on the other hand, was only able to generate an annual return of +9.7 %.
The approach has been expanded upon by many stock market professionals over the years. Susan Levermann is a well-known expert. She was the fund manager of the DWS. She has also received several awards as a fund manager for the best German equity fund. In your book “The relaxed way to riches” she described your strategy (Levermann strategy) in detail. It uses 13 different key figures to evaluate stocks.
TransparentShare has also been using the value investing strategy for more than 10 years and has further optimized Susan Levermann's strategy.
We explain in our video "Value investing simply explained - always finding the right time for your trades“How you can easily make better decisions with value investing and automated stock valuation. The presentation is on too SlideShare available for download.
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Note: Everyone who watches the video can test TransparentShare for 30 days (instead of 14 days) free of charge. You can find out how it works at the end of the video.