Value Investing: Why It Works

When we first came up with the idea of Andy's Angle it always revolved around the idea of value investing.

We wanted to create a space where we not only showcased value investing and used it for our own portfolio, but also a place where our readers could come and educate themselves on the art of value investing themselves in order to create their own unique investing style rooted in broader value investing.

To accomplish this, we are starting a new series simply named "Value Investing" in which we will cover the basics and merits of value investing, as well as how we at Andy's Angle conduct value investing with our own twist.

Value investing was developed by the prolific Benjamin Graham in the late 1800s, revolving around the philosophy that the valuation of a company and its stock aren't always equivalent.

He believed that many, if not all, companies traded at valuations that were not reflective of the business itself.

He coined the term "Mr. Market" to describe stock market valuations.

The classic story goes that a drunk salesman named Mr. Market approached you everyday with different valuations for the same exact company.

Some days the valuation is ridiculously high, and he is just trying to rip you off, but on other days he comes around with a deal that is too good to pass...

That's exactly when you rip him off.

This story translates to markets and how stocks often fluctuate irrationally from time to time, usually magnifying business changes out of proportion, creating both selling and buying opportunities depending on the direction of the overreaction.

As value investors, you seek to buy irrational fear and overblown disdain towards a stock, at a point where the valuation is simply too good to pass up compared to the true company financials. You then aim to sell when Mr. Market gives you an irrationally high valuation, usually following stellar earnings or overall increase in greed within markets.

Using these simple principles, you develop a winning strategy by only entering positions when they absolutely favor you as an investor and selling only when market forces fall out of balance again.

In modern times the face of value investing has clearly been Warren Buffett, who by most metrics, is the greatest investor of our time.

His keys to success are as simple as they come, and often times when it comes to investing, keeping it simple is often the best way to go. Buffett follows the key principles of value investing to the tee and stays true to them.

He lets compounding do the rest.

While these are the principles, there are many different ways to employ value investing to create a curated strategy for each and every investor.

Our Andy's Angle value investing formula has yielded over 1,000% in returns over the last five years, and we look forward to passing this on to our readers, and hope to inspire more investors to turn to stable and unbeatable value investing.

This introductory piece is a part of what we expect to be a 5-6 part education series regarding value investing, unearthing exactly what an investor should look for in order to consistently outperform general market returns.

We expect this to be a biweekly series within our education arm and expect to alternate releases weekly with our "Trade Spotlight" series.

Thank you,

-Andy's Angle Writing Team-