Everybody has seen films where the stock market is represented as a crowded room full of shouting, sweaty faced men, most of whom are so obnoxious you are astonished they can live with themselves. These repulsive nobodies are the media illustration of stock market investing, and when you are starting out in the business it could be really hard to shake off the impression. However, making a good living from the stock market does not always have to be regarding being hateful, or nasty. Instead, people with more gentle and sophisticated natures may look towards value investing as a safe beginner's introduction to the world of stocks and shares.
Different from the stock market bull ring, where investors chase stocks which are growing, and usually push the price up to unbelievable heights, value investing implies looking for businesses that are on the decline, and buying stocks which are lesser than their true, intrinsic, value. These will usually cost you lesser than the conventional shares, and when you purchase shares from a renowned business that has been struggling with a bad story in the media, you could be sure of a great investment. You are even relatively safe in purchasing and selling these shares, as there is no stock-marking bubble to burst.
Unlike stock market investing, which emphasizes upon the hottest shares as the main prize, and usually involves huge profits and enormous losses, value investing is a slower, gentler progress up the slopes of stock value increase. When you purchase shares in the periods of a decline in the company's fortunes, you are buying them for their value as a future commodity. In a couple of years, the downturn may have been forgotten by the general stock-buying public, and the cost of shares will gradually increase again, to the real value of the business.
With a view to take advantage from your value investing, look for a firm that truly has the wow factor, but which is also not performing so well. Choose one which has been trading as that same company for about 10 years, and certainly not less than two. You want to buy into a company that has a proven record as a firm, not a start-up business which might go bust.
When you are looking to make a profit in value investing, the money comes from the variation in between the fair price, the actual value of the organization's shares, and the price that the investor is currently ready to pay for those same shares. As the stock rises in price when the organization regains popularity, so the two amounts come closer together. When they are equal again, you can sell the shares and make a large profit.
