Each investment style has its pros and cons. As you know, I am a strong advocate of value investingas it has proven to be the safest and most profitable investment style in the long term. However, it has its advantages and disadvantages. In this article I will do a brief SWOT analysis of value investing that I encourage you to complete with your comments.
What is a DAFO análisis?
SWOT analysis is an analysis of strengths and weaknesses from both an internal and external point of view.
SWOT is the acronym for Weaknesses Threats Strengths Opportunities. In English SWOT is the acronym for Strengths, Weaknesses, Opportunities and Threats.
The SWOT analysis technique was devised by the professor Mister Market continue to offer opportunities to patient investors. Therefore, value investing will remain as the human brain turned from perfection.
Strengths of Value Investing
Value investing has proven to be the safest and most profitable investment style. If what you are looking for is profitability and long-term security, this investment style is what you are looking for.
With this investment method, time is in your favor, especially if you buy stocks in quality companies. This is because the money earned by the companies you invest in is given to you periodically in the form of dividends or reinvested so that the company earns more in the future.
Another of the strengths of value investing is that it adapts to all risk profiles. By selecting companies and diversifying, we can adapt our portfolio to the risk we want to assume. A more conservative investor will have a more diversified portfolio focused on companies with stable income, while a more aggressive investor will invest in growth companies with a more concentrated portfolio.
Finally, another of the great strengths of this investment style is that it is applicable outside the financial markets. The knowledge of value investing is applicable to making any financial decision, such as buying a house or investing in an unlisted business.
Value Investing Opportunities
As time passes, the financial economy evolves throughout the entire planet. Every time we have access to more markets and we can invest in more companies. This means that over time our investment opportunities multiply as we can buy more and more shares around the world.
Do you want to contribute something to the SWOT of value investing?
It is your turn.
Are there any weaknesses, threats, strengths or opportunities that I have missed?
I await your comments!