What is value investing?

Price is what you pay, value is what you get - Warren Buffett

INVESTING

Lillaney

4/29/20232 min read

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We will be covering the following topics in this article.

  1. What is value investing?

  2. What are some of the examples of large cap stocks for value investing in India?

  3. Which book can we read to understand value investing?

    What is value investing?

Value investing is an investment approach that involves finding and buying stocks that are undervalued by the market. The basic premise of value investing is that the stock market can be inefficient and that certain stocks can become mispriced due to temporary or irrational factors. By identifying these undervalued stocks and buying them at a discount, value investors aim to earn above-average returns over the long term.

Value investors typically look for stocks that have a low price-to-earnings ratio (P/E ratio) or price-to-book ratio (P/B ratio), indicating that the stock is priced lower than its fundamental value. They also look for companies that have a solid financial position, such as a low level of debt, and strong earnings growth potential.

Value investing is often associated with famous investors such as Benjamin Graham and Warren Buffett. Graham, known as the "father of value investing," developed a rigorous investment methodology that emphasized the importance of analyzing a company's financial statements and underlying business fundamentals. Buffett, a student of Graham, has built a successful investment career by following the principles of value investing and focusing on companies with strong competitive advantages and long-term growth potential.

While value investing can be a successful investment strategy, it requires a significant amount of research and analysis to identify undervalued stocks, and investors must be willing to hold onto their investments for the long term.


What are some of the examples of large cap stocks for value investing in India?

Some of the examples of large cap stocks for value investing in India right now in June 2023 are as follows:

  1. Power Finance Corp (PFC)

  2. Rural Electrification Corp (REC)

  3. Coal India

Which book can we read to understand value investing?

The best books to learn about value investing are The Intelligent Investor and Security Analysis which were written by Benjamin Graham.

If you wish to purchase these books you can do from the link below:

The Intelligent Investor - https://amzn.to/43laHBT

Security Analysis - https://amzn.to/45ObcGi