Value Investing

[ehendu13]

Hey everyone,

I was wondering if anyone here has gotten into "value investing". I have been interested in this topic for awhile and I am looking to get started, but I don't know where to begin. I have some money (about 2k) available to get going, and I plan on adding $50/month.

There is no goal or timeline - I am able to meet all of my other savings goals (retirement, etc.) aside from this investing.

I have one basic question: What is the best way to get started? Is it better to identify "value" mutual funds or is it better to go out on my own with exchange traded funds? Also, who is the best company to go through to do this?

I know this sounds kind of vague, but I was wondering if anyone else has had any experience with this. Thanks!

[jIM_Ohio]

Best way to get started is to buy low and sell high.

If you are looking for value investing, it was "invented" by T Rowe Price- even their growth funds have a value tilt to them.

If account is taxable I would invest $1000 into an index and the rest into a money market fund (tax free probably). Every 20% move I would either sell back to basis (sell so you only have $1000 left) or buy another $1000 lot.

By buying in $1000 increments it will be easy to track basis (taxable account) and to know where the 20% moves are.

Market drops 20%, buy $1000 more.
Market goes up 20%, sell so you only have $1000 invested (keeping the profits in cash). I am preparing to do something similar with wife's 401k.

[Gjowers]

You might check out The Intelligent Investor by Benjamin Graham. It's considered a handbook for value investing.

[zetta]

How much time and mental energy do you want to spend on investing this money? Are you looking to take up stock picking as a hobby, or do you just want to get a resonable return with less effort? If the former, read up on picking stocks via a value investing strategy. If the latter, research mutual funds that pursue a value strategy.

[ehendu13]

Brokerage Services

Which company do you think would provide me with the best option for a brokerage account? I have been looking at some of the options online (T Rowe Price, Fidelity, etc.), but it is hard to sort through all the marketing junk.

Based on my position - buying mostly mutual funds and a few stocks - which company should I go with?

Thanks again in advance!!!

[vole]

Can't agree more that reading The Intelligent Investor by Benjamin Graham should be your first step.

The next book should be Unconventional Returns by David Swensen. He manages Yale's endowment.

Rather than T. Rowe Price, consider Vanguard. They are a non-profit with some of the industry's lowest costs and management fees. They are also extremely tax conscious.

Loads do make a difference as do high costs.

If you decide to do it yourself, I've found this tool helpful:
Industry Analysis, Business Statistics, and Financial Ratios

-Dave

[jIM_Ohio]

stick with mutual funds and T Rowe is as good as any other.
If you need stocks too, I would not even consider T Rowe until portfolio was around $1 Million.

[coreys]

re brokerage accts

I have been very happy with Etrade for my IRA's. They have little or no minimum to get started and they charge very little in trade fees. Check them out.

[Broken Arrow]

I have one basic question: What is the best way to get started? Is it better to identify "value" mutual funds or is it better to go out on my own with exchange traded funds? Also, who is the best company to go through to do this?

If I may take a slightly rhetorical point of view, I don't think there is a "best way". There is only a "best way for you".

As such, there are several very good options to look into, some of which have already been suggested. Ben Graham's book is good, and so is the "Boglehead's Guide to Investing" I think. I've heard of very good things about David Swensen, but I have yet to read his book.

As far as fund companies go, Vanguard, Fidelity, and T. Rowe Price are all very good.

I recommend to look into as much as you can get your hands on, to figure out what will work best for you.

[vole]

I've heard of very good things about David Swensen, but I have yet to read his book.

I read his book "Unconventional Returns" and heard a short radio interview and came away thinking he had a great idea: Re-balancing on a daily basis. Not practical for ordinary people, but sounded like impressive results. Then I researched the topic and found several published studies that showed re-balancing made a very slight difference in returns, and did worse if re-balanced monthly.

So, not all of Swensen's advice is right.

As far as fund companies go, Vanguard, Fidelity, and T. Rowe Price are all very good.

What I do agree with Swensen is that Fidelity and T. Rowe Price have a built in conflict of interest with investors. And that as a non-profit, Vanguard is better.

-Dave
Affordable Dental Insurance Alternative and Benefits - Employee Dental Vision Health Benefits for Small Businesses

[Broken Arrow]

I read his book "Unconventional Returns" and heard a short radio interview and came away thinking he had a great idea: Re-balancing on a daily basis. Not practical for ordinary people, but sounded like impressive results. Then I researched the topic and found several published studies that showed re-balancing made a very slight difference in returns, and did worse if re-balanced monthly.

So, not all of Swensen's advice is right.

Hmm, I did not realize that. Thanks for sharing!