Thoughts and Riches

.....a blog about personal finance, motivational stories, deals, and special offers

Web Domain Registration
Go Daddy $12.99 Turbo SSL Sale!
Get Started Now
Tuesday, December 11, 2007
Buy out-of-favor quality stocks, be patient, get rich - the case for value investing
The article presents an interview with Christopher Browner, one of the five managing directors of Tweedy Browne, and author of The Little Book of Value Investing. A staunch devotee of value investing and a follower of Benjamin Graham and Warren Buffett, Browne favors buying out-of-favor stocks on the cheap. As per him, value investing has produced better results than growth or any other stock investing strategies. As per him,
There are plenty of academic studies confirming that if you buy stocks that are undervalued by simple metrics like low price/earnings and price/book ratios and you are patient, you'll beat other strategies in the long run.
Most people want to own sexy, fast-growing stocks. But as Buffett says, you pay a dear price for a cheery consensus. As a value investor, you hold your nose sometimes and buy a boring stock because it's cheap. Then you have to be patient.
As per Browne, even though it is possible that cheap stocks can stay cheap but generally if investors are patient, they are likely to be rewarded. Despite the ongoing subprime problems of financial stocks, Browne is not averse to and owns financials.
Yes, but ours have very limited subprime exposure: PNC Financial, U.S. Bancorp and Lloyds. The first yields nearly 4%, the second over 5%. Lloyds is takeover-able. Once people realize there's not a warehouse full of subprime out back, the stocks will rebound.
Although Browne shies away from momentum stocks, he is not averse to buying growth stocks if they are selling at a reasonable price but he also recommends have a good amount of cash.
I always keep two years' worth of expenses in cash. No matter what happens in the markets, I'll always have food.
I have read Browne’s The Little Book of Value Investing. It's a small book, a decent read and makes a good case for value investing. However, I wish he had gone into more detail on how to analyze the fundamentals, how to compute the intrinsic value of stock, margin of safety, etc. The book seems to be geared more as an introduction to value investing.

For complete article, see: The prince of value
posted by Ruby @ 6:21 AM  
Post a Comment
<< Home

See important Disclosure and Disclaimer

Favorite Quote
"If you look at what you have in life, you will always have more. If you look at what you do not have in life, you will never have enough".
                - Author Unknown
This site uses cookies from companies like Google and others to enable the companies to deliver their services, personalize their ads and product offerings, and for traffic analysis. Information about your use of this site is shared with these companies. By using this site, you agree to its use of cookies. Additionally, this site, including blog posts, may contain reviews, links, banners, text and other forms of advertisements for products, services, courses, and so forth of companies of which we may be an affiliate member or for which we may get paid for referrals. This site may also contain blog posts for which we are paid, as well as blog posts regarding products or services of companies from which we may have received complimentary products or services.
Reward Surveys/Panels/Shopping/Contests
Kellogg's Coupon Newsletter - Take Control of Your Money
Protect Your Computer Files
Job Search site
Indeed Jobs
Yahoo! HotJobs - Job Postings
Credit Cards
Best Western Canada Credit Card - 20,000 rewards points: Apply Now!
Apply Now!
Health: eHealthInsurance
Phone Service
Investing 120x120 Best Seller Giveaway
Find the perfect babysitter at
Previous Posts
Favorite Charities
Disclaimers, Privacy Policy, and Disclosures
  • Disclaimer, Privacy Policy, and Disclosures

  • Third-Party Offer Disclaimer
  • Subscribe to Blog Posts
    Add to Google Reader or 

    Bookmark this blog site
    Contact Me


    Web Site Link Exchange

    Link Exchange

    © Thoughts And Riches proudly powered by Blogger.