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Wall Street on Sale

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Wall Street on Sale

How to Beat the Market As a Value Investor

McGraw-Hill,

15 min read
10 take-aways
Audio & text

What's inside?

The lessons are here; don’t learn them the hard way.

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Editorial Rating

7

Qualities

  • Applicable
  • For Beginners
  • Inspiring

Recommendation

The bull market has turned value investing into the neglected stepchild of wealth-building strategies. Tech companies have been big winners, and even value investing icon Warren Buffett has fallen on tough times. Still, Timothy P. Vick makes a compelling case for value investing. He dismisses such strategies as timing the market and chasing hot sector stocks as more gambling than investing. Vick argues that investors should seek bargain stocks by studiously researching companies and finding those whose current assets and future growth are undervalued by the market. Vick’s useful rules for value investing include this first axiom: You buy cars and clothes on sale, so why not stocks? He lays out tools for determining when a stock is on sale, such as calculating return on equity and profit margins. While the subject matter is arcane, the way Vick conveys his message is easy to understand. getAbstract recommends this book to investors on all levels (and it’s far more cheery than the news from the market).

Summary

Savoring that Out-of-Favor Flavor Value investors link stock prices with company performance to select and purchase out-of-favor stocks. The stock market fluctuates based on greed and emotion, quite imperfect measures. Because the stock market can be imperfect, value investors have the opportunity to buy companies at bargain prices. However, in recent years growth investing has overshadowed value investing. Growth investing, which is inherently speculative, is the strategy of buying stocks based on projected earnings. This sort of by-guess-and-by-golly buying also was popular in 1987 and in the 1920s, with disastrous effects. Value investing might be out of favor, but it’s the surest way to make money in the market. To generate huge returns, buy growth companies when their shares are depressed and hold them a long time. Cautious value investors know these seven market lessons (don’t learn them the hard way):

  1. The more you trade, the worse your returns.
  2. The only way to beat the market is to determine a stock’s worth and buy it for less.
  3. Diversifying and dollar-cost-averaging are money-losing strategies.
  4. Timing...

About the Author

Timothy P. Vick is founder and editor of Today’s Value Investor, a stock newsletter published in Hammond, Indiana. Vick worked as a journalist in Chicago before becoming a stock analyst. He also wrote Lessons for the Individual Investor, published in 1997. Vick has a bachelor’s degree in history from Ball State University and an MBA from Purdue University. He lives in Munster, Indiana.

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