The value investor’s strategy for choosing the right stocks
Link: The value investor’s strategy for choosing the right stocks
Quote: “Most value investors hold portfolios of 20 to 30 stocks. Holding this number of stocks allows them to know a lot about these companies – in depth. Whereas in a (typical non-value) portfolio of 100 to 200 stocks, it is quite unlikely that a portfolio manager will know a lot about all the companies.”
Extract:
- Value investors believe that when they buy a stock, they buy a piece of the company, they buy as owners.
- Value investors believe that the stock market moves up or down many times irrespective of fundamentals.
- Value investors always look for a margin of safety. The margin of safety protects an investment’s downside.