“I am extremely pleased with the market-beating returns, but I am even more pleased by the level of service you have provided. The end result has been that I am completely comfortable with the nature of my investments and am quick to recommend LWM to friends and colleagues.”
What is Value Investment?
Value investment is in essence a very simple concept. It is merely seeking to buy something for considerably less than its real worth. Although simple to state, the actual practice of value investment involves detailed research and tremendous discipline.
Value investment rests on a distinction between a company’s market value (determined by its share price) and its real (or “intrinsic”) value, which is a reflection of its underlying business strengths and weaknesses.
In the short term, emotional factors such as fear and greed can have an outsize effect on the market, driving a company’s share price (and therefore its market value) considerably higher or lower than its intrinsic value. However, over the longer term, the underlying strengths or weaknesses of the business that are captured in the intrinsic value will have the pre-eminent effect on the company’s share price, meaning that the share price will move to more accurately reflect the company’s intrinsic value.
The value investor looks to invest in companies that are substantially undervalued by the stock market. Over the longer term, the share prices of such companies are likely to rise dramatically as their underlying qualities become apparent.
Value investment generally involves a long-term buy and hold approach to investment.