...and Just What is a "Value Stock"?

Sometimes, a simple definition just isn't quite good enough! For example, a quick Google search produces this: 

• A stock that is considered to be a good stock at a great price, based on its fundamentals, as opposed to a great stock at a good price. Generally, these stocks are contrasted with growth stocks that trade at high multiples to earnings and cash.

The Working Capital Model and its offspring, The Value Stock Watchlist Program, are much more particular, looking only at stocks that meet all of the following specific selection criteria... we call these guys Investment Grade Value Stocks:

• A Standard & Poor's Quality Rating of B+ or better, based on the current month's issue of the S & P Stock Guide.

• A common stock, not including ETFs, traded on the New York Stock Exchange.

• A history of profitability.

• A history of regular dividend payments, regardless of their size.

• A price above $10.00 per share and below $90.00 per share. (Not an IGVSI requirement.)

The Investment Grade Value Stock Index (IGVSI) is designed to give both Working Capital Model users and Value Stock Watchlist Program subscribers a benchmark with which to formulate their cycle-through-cycle portfolio performance expectations. The IGVSI should also confirm "Smart Cash" balances and the relationship between numbers of buy and sell candidates and transactions. The index is a measure of a very specific segment of the Equity Market and is in no way similar to any other average or index that we know about. Movements of the IGV Stock Index are expected to be different from those of the DJIA, the NYSE Index, and the S & P 500.

Articles on Value Stock Investing

The Case for Value Stock Investing... What If?

"Wall Street Institutions pay billions of dollars annually to convince the investing public that their Economists, Investment Managers, and Analysts can predict future price movements in specific company shares and trends in the overall Stock Market. Such predictions (often presented as “Wethinkisms” or Model Asset Allocation adjustments) make self-deprecating investors everywhere scurry about transacting with each new revelation. “Thou must heed the oracle of Wall Street”… not to be confused with the one from Omaha, who really does know something about investing. “These guys know this stuff so much better than we do” is the rationale of the fools in the street, and on the hill (sic). " [Click here for the full article.]

In Value Stock Investing, Quality is Job One

"How much financial bloodshed is necessary before we realize that there is no safe and easy shortcut to investment success? When do we learn that most of our mistakes involve greed, fear, or unrealistic expectations about what we own? Eventually, successful investors begin to allocate assets in a goal directed manner by adopting a realistic Investment Strategy... an ongoing security selection and monitoring process that is guided by realistic expectations, selection rules, and management guidelines. If you are thinking of trying a strategy for a year to see if it works, you're due for another smack up alongside the head!" [Click here for the full article.]