What is Value Investing?


The Small Investor

There are two main investing styles – momentum investing and value investing.  Momentum investing is investing in growth.  Finding stocks that are growing fast, therefore increasing in price rapidly, and buying them regardless of the cost.  People who are buying things like Google and Facebook are momentum investors.  They are buying what is hot, expecting it to stay hot, at least for a while.

Value investing is just the opposite.  Value investors are like the guys who listen to alternative rock and hate it when one of their favorite bands makes it to the radio.  They try to find the stocks that no one would touch with a 20-foot pole and buy them.  They are trying to find stocks that are so beat up that they can scoop them up on the cheap.   They then hold and sell then when the stock turns around and becomes in vogue again.

For…

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