Invest
Value investing isn’t about buying “cheap” stocks
By The Asia Report  •  January 24, 2019

I understand the appeal of using approaches that rely on buying “cheap stocks” as someone who likes a more quantitative approach to investing,

At the same time, I have always felt that many people have the misconception that value investing is about buying cheap P/E, cheap P/B or high dividend stocks.

This is completely wrong!

As someone who likes a more quantitative approach to investing, I understand the appeal of looking at “hard numbers”.

However, value investing is really about buying companies at a discount to intrinsic value, and valuation is only one part of the equation when assessing whether a company is cheap to buy.

Buying “cheap” does not mean cheap valuation

Valuation ratios are highly useful, but can be very misleading.

A company with a low P/E ratio could have a large one-off earnings. Other scenarios could be that its earnings are at a cyclical high, and are unsustainable.

...
Read the full article
By The Asia Report
Richard is passionate about teaching the principles of value investing to people from all walks of life. Richard is also a frequent guest speaker on investing and financial markets at institutions such as University College London and the London School of Economics, and at investment conferences held in Singapore ...
LEAVE A COMMENT
LEAVE A COMMENT

Your email address will not be published.

*

Your Email Address will not be published
*

Read More Articles
More from thefinance