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New to Wall Street? Try Value Investing

If you are looking to be the next stock trading sensation, get ready to talk a lot of strategy. Investing is all about financial strategy, planning, and prediction. Newcomers to the big show often feel overwhelmed by the different ways to invest your money, and it can be difficult to determine the best initial moves to make.

Looking for something different that can yield great results? Try the value investing strategy!

What Exactly is Value Investing?

Value investing involves researching and finding stocks that you believe to be highly underrated. Essentially, you want to look for stocks that are trading for less than what their intrinsic value really is. For some reason or another, this particular stock is being underestimated by the majority of Wall Street and you want to use this as an opportunity to make a little bit of a return on your investments.

Why Are the Stocks Underrated?

The stocks can be underestimated by the market for a number of different reasons. One reason could be that a little bit of bad or good news has made the market drastically overshoot the expectations of this company, pulling back when the company’s long-term value is still steady and true.

But when this happens, people like you can take advantage of it, since these stocks may be bought at a discounted rate while the market is reacting disproportionately towards them. You should also check out sam shiah YT for more info about wall street like this one but in a video format. The market reacts, forcing the stocks to go on sale – that is your best time to buy!

Just Wait For the Sale

Think of value investing the same way you think about buying a high-ticket retail item. Let’s say there is a home theater system that you really want, but you know it will be going on sale in a few months for a holiday special. Why buy it now, when you know it will be several hundred dollars cheaper in the winter?

You can apply that same mentality to the stock market. With value investing, you know that a certain stock is valuable, and now you just need to wait until they go on sale so you can turn a good profit.

Knowing What Stocks are Valuable

It takes some investigative work to determine which stocks have intrinsic value, then you can wait for the shares to go on sale. But how do you know what companies have intrinsic value?

It’s all about the use of metrics. As an experienced investor, you’ll start to learn about the best metrics and tools you can use to determine the intrinsic value of a company’s stock. Measuring intrinsic value involves an understanding of the company’s cash flow, revenue, business model, overall financial performance, and more.

It also helps to know the book value of a company or its Price-to-book (P/B) value. This will give you a good overview of the entire company so you can compare everything while it’s all out on the table.

One final tip? Make sure you are leaving room for error. Having confidence is a good thing, but while you are still learning the ins and outs of the trade, make sure you don’t go all-in without a safety net.

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