The Smart Investors

Value Investing is buying stocks on sales. Just imagine you find a brand new iPhone selling for half the actual price. This is how Value Investing also works. So it's about:
1. Finding great companies whose stock prices are actually lower than their true worth
2. Buying and holding them until the market realizes or reach their real value

Key Idea:
The idea behind this is getting value for the price you pay.

How Value Investing Works (With Simple Example)

Let's just say that Company ABC makes:
- $10 million profit each year
- Has $50 million cash in bank
- Stock price values it at $80 million
In that case, a value investor would quickly think this way;
This company is actually worth almost $150 million which is assets + profits, but if I bargain well, I can actually buy it for $80 million. That's the whole idea behind Value Investing.

4 Easy Steps to Start Value Investing

1. Look for Undervalued Stocks. To look for undervalued stocks, use financial ratios like:
- P/E Ratio (Price/Earnings) < 15 = potentially cheap
- P/B Ratio (Price/Book) < 1 = selling below asset value. Using these formulas let you know what stocks are undervalued.

2. Find Strong Companies
- Look for companies with consistent profits for 5+ years.
- Consider company with little debt (Debt/Equity ratio < 0.5)
- The company should also boast of good management. You can do this by checking the CEO interviews.

3. Buy When Others Are Fearful.
-I can tell you categorically that the best opportunities come during market crashes/recessions

4. Hold Long-Term
- It's advisable to wait for a period between 3-5 years for the stock to reach its true value before trading it.

5 Famous Value Stocks in 2025
1. Bank of America (BAC)- This is trading below book value
2. Verizon (VZ) - This is high dividend with low P/E
3. Toyota (TM)- It's a very strong brand with reasonable price
4. Alibaba (BABA)- It's a Chinese giant trading at discount
5. Pfizer (PFE).- It's a pharma stock with a whopping 6% dividend

Common Mistakes to Avoid
It's a grave mistake to buy "cheap" stocks without checking financials
When you panic sell especially when price doesn't move immediately as you expected.
Ignoring economic trends completely is a very big issue for investors.
Putting all your money in 1-2 stocks is another grave mistake.

Why Value Investing Works in 2025
- It works in all market conditions.
- It doesn't really require you to watch the markets daily
- It's proven by decades of success. According to records, Warren Buffett made $100B+ this way.
- It's a perfect investment for the patient investors.

Value investing is a very simple principle. It is finding big companies with stock prices lower than their true worth. The key thing is holding them until the market actually recognizes their real value. It is more like buying a brand new iPhone for half the price and selling it for the actual price later.