patience in the market - investing in stocks
6/5/2009
To be a true value investor you must learn patience in the market. There is a lot of debate that has been going on for years about whether or not technical or fundamental analysis work. Many experts have claimed to have luck with both of them leading to the next argument of which one works the best? Personally I don’t see how you can argue with the fact that "value investing" works when you see successful people like Warren Buffet use it, and he is now one of the richest people in the U.S.. The excuse that I hear from a lot of people is that Warren buffet isn’t making money like he used too which goes to show you that value investing is starting to becoming obsolete in today’s fast paced market. The idea that value investing doesn’t work because we live in such a turbulent time where everything is changing is a totally a false assumptions. Value investors tend to do badly in the market that is falling because they are buying companies cheap with the plan to hold them along time. The good news is that they almost always eventually do get a good return on their investment because they hold onto good business for long periods of time. I think excuses come from investors who simply don’t want to take the time to find business that are actually worth their money; businesses like these take patience in the market as well as research. It is very to think that you can just make money by looking at some easy chart patterns when in fact investing for most people is way more complicated and dangerous if they have any hopes of making money in the long run. There are reasons why value investing actually still works, and in my opinion it is probably the most logical and practical form of investing. I have no doubt in my mind that when the economy gets out of the recession, value investors all over not just Buffet, will make a fortune thanks to a good old buy and hold strategy. Bellow I will list some reasons why a buy and hold value investing strategy still works today if you have patience in the market.-The market has always gone up eventually Technically if you just bought a bunch of diversified stocks on the market when we were having a recession in the long run you would make money. The market has always gone up eventually which means that in general companies for the long term are undervalued for what people will ask for them in the future if we have been in a recession. -It is self evident that companies that do well will eventually succeed and make you richer It is true that goons on Wall-Street can make the price of a company be too high or low but in the long run the price of the stock is tied to the success of the business and therefore if you buy a great business at a great price you really can’t lose. -People have said before that value investing doesn’t work Yeah people before have called Buffet a fool for not trying to find a quick buck and using buy and hold tactics. People have said that it is just too risky too hold onto a stock that’s going down and some have said that it is risky to hold onto any stock too long. This can easily be proven false again, because if you look at companies like Wal-Mart, if you would have bought stock in them long ago it wouldn’t have taken a lot of initial dollars invested to make you a Millionaire. -Conclusion While it has been shown again and again that people who use value investing do make money, many people still refuse to believe it. People also over think value investing; the sheer sound of those two words “value investing” makes a lot of people think that they will have to be huddled over a desk for hours looking at weird numbers and formulas, when all they really have to do is find a business they know something about and try to buy it for a reasonable price. If you use this strategy it will work so long as you have patience in the market.
finance ratios for patience in the market
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