Value Investing: Simple Strategies For Finding Value

The value group may also include stocks of new companies that have yet to be recognized by investors. Stocks that may be undervalued share two critical qualities: strong fundamentals and attractive valuation metrics. Fundamentals Benjamin Graham, the father of value investing, advocated a disciplined approach for identifying stocks with value. Critical to this approach is a familiarity with the business of the company you are investing in. You should be knowledgeable about what the company sells, how it operates, what the competitive environment is like, who manages it, and what its threats, opportunities, strengths and weaknesses are. A good place to start is with businesses or industries you know or are interested in. Knowing a companys products, customers, competitors and operating environment is essential in identifying its intrinsic value, and the more familiar you are with it, the better. Does the company have some unique competitive edge?





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Treasury yield curve. The 200-day moving average is the average price level of an investment for the past 200 days, and the yield curve is a chart that plots interest rates of U.S. Treasury bonds at different maturity dates. If either the S&P 500 Index falls below its 200-day moving average, or if shorter-term interest rates are higher than longer-term interest rates on the U.S. Treasury yield curve, we will lower the equity allocation. The Elevation Group fund is constructed to diversify risk across sectors, which results in significant differences in our sector allocation relative to the S&P 500 because indexes tend to concentrate most of their risk in a few sectors. We then make active overweights and underweights based on the 200-day moving averages of each underlying sector. IBD: What are your buy, sell rules?