Get Paid To Wait: Value Investing And High Yields

The concept of value investing is very simple; buy assets for less than they are worth. The larger the discrepancy between price and value, the bigger the margin of safety. Intuitively, value investing makes sense. Not only does it make sense, it creates high returns. Numerous studies have shown that buying assets for less than they are worth creates excess returns. The image below shows the performance of an equal weighted portfolio of the value decile (10% of stocks with lowest P/B) of stocks compared to the glamour decile (10% of stocks with highest P/B). A 20% CAGR over the period from 1926 to 2013 is nothing short of amazing. Source: GreenBackd Don't Get Too Excited - Value Stocks Are Scary Value investing is simple, but not easy. Stocks trading at a discount to their assets usually do so for a reason; because there are serious problems... Read more