Why invest through Value Investing?

Gustavo Trillo from Bestinver explaining why investing through Value Investing

Gustavo Trillo from Bestinver explaining why investing through Value Investing

As you know well (since I never tire of repeating it), I am a firm defender of value investing as it is the most profitable and safe investment method in the long term. I am not the only one, since, despite being a still minority investor style in Spain, it is the one used by the managers of the most successful investment funds around the world.

In this article I make a transcription of a part of Gustavo Trillo's intervention in the last annual conference of Bestinver in which he explains why they invest through value investing and the fundamental characteristics of this investment style.

Why do we invest through Value Investing?

When one is dedicated to any profession in life, what one tries is to identify those professionals who have excelled, those people who have done better than others. It is true that in the investment world there have been different ways to be successful, but it is no less true that there is a trend called value investing that has been characterized by offering successful results but also in a consistent way.

What defines this current?

Well, a basic premise and that is that the value is different from the price. Many times the market value of a company does not reflect its intrinsic value. We, as value investors, what we try is to identify those companies whose intrinsic value is frankly higher than their price and from there wait the time necessary for that value and that price to converge.

What are the fundamental characteristics of these investors?

The first, long-term investment, patience. This process of convergence between value and price does not take place in a matter of days or weeks, but most likely in quarters or years. Let's be pacient.

 

The second is to invest in understandable businesses. If what we want is to value a company, knowing its true intrinsic value is hardly going to be possible if we don't even understand its business well.

 

The third, which is pure common sense but is a golden rule, buy only at good prices. If we buy high, the chances that an investment will go wrong are much higher than if we buy cheap.

Do you want to start investing through value investing?

Now you know why you should invest through value investing.

If you are interested in learning to invest through value investing I recommend you download my free eBook "Guía Rápida de Value Investing”With 40 questions and answers to get you started in investing in the stock market.