Value Investing Blueprint: Beat The Stock Market

By David West

Value Investing is the #1 Stock Investing Strategy to earn market beating returns. The most successful investors are Value Investors – and that's for a reason..

Just A Handful of Successful Value Investors :

• Warren Buffett (Net Worth $76 Billion)
• Charlie Munger (Net Worth $1.52 Billion)
• Seth Klarman (Net Worth $1.55 Billion)
• Peter Lynch (Net Worth $350 Million)
• Sir John Templeton (Net Worth $1 Billion)

The millionaires and billionaires have understood this and use it to their advantage. It's time for you too!

• Language: English
• Publisher: David West
• Release date: Jun 10, 2022
• ISBN: 9798201269432

Book preview

Disclaimer

The content in this book is for informational and educational purposes only. It is not a recommendation to purchase or sell any of the securities or investments of any kind. If any particular cryptocurrencies or investments are mentioned, they are for illustrative and educational purposes. Investing and trading in any financial instruments involves risk of loss. Indicators, strategies and rules provided are for educational purpose and should not be construed as investment advice. The author does not guarantee any results or investment returns based on the information contained herein.

Introduction To Value Investing

Have you ever wondered how Warren Buffett turned his initial investment of $20,000 into billions of dollars today? It is through value investing and also the magic of compounding!  

Investing is akin to planting a money tree that grows bigger and bigger over time. Warren Buffett illustrated this point nicely when he said someone is sitting in the shade today because that someone planted the tree a long time ago. By living on a bit less today, it allows you to live like a king later.

And the sooner you start, the better off you'll be.

Value investing gives you the framework to pick stocks that are going at bargain prices. This is the method that gave Warren Buffett absolute confidence in his investments, even when stock markets were in panic selling mode. Coupled with the power of compounding returns, his wealth grew into a huge beautiful tree that we see today.

So why should you invest your money in stocks and not in gold or government bonds? Well, because stocks have historically outperformed both of these with a significant margin. If you are serious about growing your wealth, then stocks are the way to go.

There are two ways to look at stocks the right way and the wrong way. If you look at things the wrong way, it does not matter how much effort you put in or how smart you are, because the chances of the desirable outcome remain small.

Let me explain by giving you an example.

Bill, a hardworking guy with a dream, starts a small One-Man company selling toothpaste for dogs, business goes well, and after a few years, the company is generating several million dollars in annual income. Bill, hoping to make more dogs happy, wants to expand his business internationally.

This requires a significant investment to raise the necessary funds. He decides to bring his company to the stock market.

This is what happens.

Bill's company is split up into 10000 tiny pieces.

Each piece is called a stock.

These stocks are then offered on the stock market where people like you and me, as well as pension funds, banks and other parties are free to buy them.

Each stock you buy, buys you one part of Bill's business.

By investing in Bill’s stocks, you effectively become the owner of a small part of his business. And the fate of the money you invested is therefore closely tied to the performance of Bill's company.

The more money Bill makes, the more money you make.

Now that you know that the stock is essentially a part of a business and that the performance of the business is closely tied to the performance of your investments, it follows logically that to analyse the attractiveness of a stock, we should look at the price of the stock and also at how well the business is actually performing. We will cover this process in detail in later chapters.

Analysing stocks is similar to buying a can of tuna for example. You can sell it for any price you like. But this price says nothing about the quality of the tuna in the can. You will only know how good the tuna is until you actually open it and look inside.

Technical analysts tried to predict short term price movements, disregarding fundamental data about the underlying company buying stocks and then quickly selling them again for a profit. The problem is that stock prices are determined by supply and demand.

If more people want to own a certain stock, the price goes up.

If a lot of people want to get rid of a stock, the price declines.

Sounds simple enough, but people do not act rationally.

They act emotionally, especially when it comes to money.

This irrational behaviour on the stock market makes it absolutely impossible to accurately and consistently predict short term price movements.

Value investors take a completely different approach. They do not try to predict short term price movements, but instead use the irrational behaviour on the stock market to their advantage by buying pieces of great companies at bargain prices and then simply wait until the price inevitably reverts back to value.

Value investing is a contrarian strategy because the reason why stock is cheap is often because not many people want to own it. However, if you could buy a quality house that’s selling below the market price due to irrational behaviour, you’ve gotten yourself good deal.

And even though you cannot predict what the price of the house will be in the short term, you can be fairly certain that you will make money in the long run or at the very least minimize the risk of losing money since your purchase price is already so incredibly low.

So, while it is common knowledge that to earn more money, you need to take greater risks, value investing turns this notion upside down and it's actually a strategy which maximizes potential gains while minimizing downside risk.

In summary, value investing is based on the following two simple principles. Finding high quality profitable companies and buying them at

Reviews for Value Investing Blueprint

[Dave · Rating: 5 out of 5 stars]

This is a very well written book, and I found the content very interesting and useful. It's written in such a way that you can easily follow along with the main idea. I've learned more about the value investing field than I thought I ever would, and I definitely plan on using these ideas to improve my portfolio.