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Topic: 【Let's Talk Investment】- Proven Path To Prosperity Through A Market Decline
As financial planners, we are stewards of our clients’ core savings, hence it is imperative we safeguard their investments well to meet their financial goals. To achieve this, we adopt a value investing philosophy to create our investment portfolios.More About Value Investing...
Value investing involves buying assets at attractive prices relative to their appraised value. For equities, we ascertain their productive value based on the quality and growth of their underlying businesses.
Value investing requires time, because the asset prices may not always reflect their value in the short term, but in the long term, they converge. As Benjamin Graham, the father of securities analysis, said “In the short run, the market is a voting machine. But in the long run, it is a weighing machine”.
Using Microsoft as an illustration, its share price collapsed by almost 50% from 2007 to 2008, while its earnings were relatively intact, causing a short-term divergence between its price and value. 8 years later in 2016, the share price converges back to its earnings (value).
In our value investing, we endeavour to find high quality companies with good growth and buy them at reasonable prices. This allows your wealth to grow and compound with the growth of the underlying companies over the medium to long term.