My Value Investing Methods
This is a reflection post after reading about their value investing strategy by MyBigFatPurse. This is also for people who want to understand more about my investing methods.
I felt that it is a very very good and long write up on their way of value investing.
Despite always saying that I am a value investor, it is sad to say I am not like them (Not as hardcore as them). I am much more like a hybrid.
Their Strategy have a very tough stand on Book Value - it must be at a significant discount to the Stock Price - which in my view should really be the main point of value investing.
For me, I cannot stand not having dividend - if you can stand it, you will make a better value investor than I do. In my view, there is always a chance that a stock could become a value trap and the opportunity cost will be huge (spending cash and time holding this value trap instead of a value stock).
Furthermore, my value scorecard requires PE, ROE and ROA, which use earnings to calculate the ratio. In addition, sometimes its too influential on the scorecard too. Nevertheless, in value investing, there is almost no use of earnings. Only Book Value calls the shots.
Finally, some value investors may invest in stocks that with negative earnings and it may continue to go downhill. I have yet to learn to withstand these shocks and I will still panic.
In other words, I feel I still have a long way to go if I intend to be a true blue value investor.
BUT this does not mean I never had any winning stocks (Sold after at least 30% gain and not including any blue chips) before, they are;
ECS (Delist), CDW Holding and E2-Capital.
Thus, I believe that everyone can have their own ways of investing and still gain from the market. You just need to find your own way and be consistent.