Most people have perceived that value investing strategy is a boring strategy. This may be true in the short term. However, there are lots of excitement in the long term.
To practise value investing strategy, you need a huge of "true brave". Value investors need to do mass of homework plus lots of "imagination" or "speculation". However, the "speculation" is only about the future development of the business based on the results from their homework, instead of their market price.
Excitement No. 1: To speculate the Earning of a Business
Indeed, after doing abundant of homework on a particular business, supposedly, as a value investor, you should be able to "speculate" the future earning of the business. It may be the earning in the next quarter, next year, or even next few years.
Interestingly, you will receive the answer in the future - because the financial report of the business will be announced in the future (timely). Thus, you can even use the results to revise and sharpen your valuation strategy, and to learn new things about business development.
Note: The market price of businesses may not in-line with their valuation in the short term.
Excitement No. 2: To Buy Good Business with Extremely Cheap Price
Who says good thing never cheap; and cheap thing never good. This is probably because some people have limited their choices in the market.
In fact, good thing can be cheap when only few people know about it. If you understand this idea, then you will be crazy to find good things with cheap price like me frequently.
Excitement No. 3: To Sell Good Business with Extremely High Price
The "job" or "duty" of an value investor is to correct the wrong valuation in the market. We do earn from our services - to correct the wrong valuation in the market. In fact, we do not earn from seducing other to buy high from us.
Kindness gets lucky. If someone is desperately to buy shares from you with very attractive price, then you should help them - exchange your shares with their money.
Excitement No. 4: To Experience the Unexpected
What is the trend of the market in tomorrow, next month, or next year? Who knows. And why should we know about it?
Life is full of unexpected (or surprises). Then, what we need to do are
- to focus on what is controllable,
- and to enjoy what is uncontrollable.
In fact, trend is the friend of value investors.
That's all for today. More fascinating articles and sharing will be updated weekly in Xaivier Blog. So, you are welcome to subscribe our feed to receive our latest sharing.
Written by: Xaivier Chia
P/S: The above sharing is solely based on personal insight and information that believed to be reliable. Your valuable feedback are very welcome.