Investing Strategies as a Value Investor
I would look into the following below, and consider these ratios before investing, as follows: 1. Valuations based on earnings such as P/E & P/B . 2. Dividend yields . Whilst its important for a company to have a higher amount of retained earnings reinvested into the business than to pay dividends eg. Berkshire Hathaway. But as a passive investor it is good to receive some of the profits as dividends. Rule of thumb is if it is safe to store money in the bank at an interest rate of 1.5%, therefore ideally you want to get a dividend yield of higher than the interest rate in term deposits or government bonds, for the extra risk to be worthwhile. 3. Net assets > Market capitalization to provide a margin of safety. 4. Only buy stocks which have a net assets multiple of under 1.5x. 5.Compare the Book value per share to the current share price. 6. EV/EBITDA . Some use this ratio to measure, but others consider this irrelevant. 7. Current ratio = Current assets/Current liabili