Hey Guys welcome to module 2 and this module will talk about some value investing principles.
You don't have to be a legend to generate market beating returns with a value investing strategy.
But if you want to understand how to be a successful value investor it will help to keep these principles
in mind.
OK the first point you need to acknowledge is that value investing is not gambling and you should approach
it with a full understanding of exactly what type of investor you are.
And most importantly you must understand exactly what you buy and why you buy it knowing the what and
the why here is very important.
You know value investing isn't a passive strategy.
Far from being a guessing game or a gamble value investing is work when evaluating a company.
You should be able to answer the following questions and explain everything in your own words.
What is the company you're investing in do.
How does it make money.
What are its competitors what are the potential risks that it may take.
And why do you expect its stock price to rise over time.
It's important to know these things when you first invest.
Of course but it's just as important to stay up to date on major developments affecting the company
so that you can continue to answer those questions accurately at a minimum.
You should read the company's quarter reports and keep at least a half lie on news pertaining to the
company so that you understand if its situation is changing.
If something happens that lowers its intrinsic value you'll need to re-evaluate it.
Do you still have a good reason don't the stock if the company you own takes a turn for the worse with
no likely recovery on the horizon selling stock may be the best option even if it means taking a loss
when it comes to investing.
Minimizing your risks is important and that should be your first priority.
So that's principle number one.
Understand what you buy and why you buy it.
See you in the next video.