Benjamin Graham, the father of Value Investing and the author of “The Intelligent Investor” determined five types of value investing in his book. You could clock returns that are more than satisfactory. They are:
- General Trading. Look at the market as a whole, as such trading the indices. This has become possible for retail investors with the advent of index ETFs, which were not available during Graham’s time.
- Buy Cheap, Sell High. Enter the market when the prices are down, then selling when it becomes much more valuable.
- Selective Trading. When trading selectively, you’ll pick and choose stocks that might perform better than average over a period of around a year or so.
- Bargain Purchases. Seek out stocks that are trading lower than their true worth using a proven technique, such as Graham’s famous Net Net Strategy
- Long Pull Selection. Also known as growth investing, this strategy involves choosing companies that will likely perform better over a longer period, especially when compared to others.
Graham also addressed the #1 question that every investor comes across when managing a portfolio; Should you “buy low, sell high” or “buy and hold”?
His take on the matter is that whichever strategy you use to tackle any particular investments is ultimately a personal choice that needs to be considered carefully and confidently. Even with all of the strategy know-how in the world, your approach is ultimately something that has to be comfortable for you to implement.
Your attitude and personal history with investments are often the biggest deciding factors. For instance, someone who is used to dealing with business matters will be more keen to make their decisions based on financial projections. Their experience with stocks will likely end up much the same.
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Individuals who haven’t had a lot of business experience may not find this easy. Instead, they may find it more appealing to simply invest in funds or the market.
There’s really no right or wrong way to handle your investments as long as you take a rational and careful approach. Always keep up with the facts and make sure you’re looking out to reduce your risks.
If you are looking for a specific value investing strategy, we share our entire strategy that has brought in 14.5% annual compounded returns at the Value Investing Mastery Course.