Carnival of Value Investing # 9 – June 25th, 2011 Edition

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Welcome to the June 25th edition of The Carnival of Value Investing! 


For those of you unfamiliar with The Carnival of Value Investing, the purpose is to showcase the best posts throughout the personal finance blogosphere each month related to undervalued stocks and value investing strategies in general.


Investopedia.com defines “value investing” in the following way:

The strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. They believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond with the company’s long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated.

Typically, value investors select stocks with lower-than-average price-to-book or price-to-earnings ratios and/or high dividend yields.

I think that all of us can benefit from knowing more about value investing. Even for a passive investor like myself, I incorporate small-cap and large-cap value index mutual funds in to my investing strategy.

As such, let’s get to this month’s value investing posts! There were quite a few posts submitted to the carnival this month. However, only the 3 selected below were specifically related to value investing.

Echo presents How To Add Gold To Your Portfolio posted at Boomer & Echo.

In this post, Boomer and Echo discuss different ways that gold can be added to an investor’s portfolio. However, they advise that caution should be taken before buying, given that gold is currently priced above it’s 52-week high. Personally, I have also been contemplating whether or not to add gold to my investing portfolio. However, as a passive investor, I haven’t yet decided the best way to go about this, or that it is even totally necessary. This post will serve as a good resource whenever the time comes for me to take action.

No Debt MBA presents Buy stocks that leave the S&P 500 posted at No Debt MBA.

No Debt MBA shares their thoughts about an interesting value investing strategy in this post. Given the fact that so many mutual funds track/buy shares of stocks that are in the S&P 500 index, they broach the question of whether an investor could make a good deal of money by investing in stocks that have recently left the index (and are intrinsically undervalued as a result). 

My guess to this would be that the market would self-correct to account for this. However, I am by no means an expert when it comes to individual stock selection. What’s everyone else’s take on this? Will this strategy work? 

Investor Junkie presents What I’m Investing In Now posted at Investor Junkie.

In this post, Investor Junkie shares his thoughts about the strength, value, and direction of the current stock market and also the recent performance of his actively managed investments. Overall, he feels that the market is overpriced by historical standards. I would tend to agree with this assessment. One good practice that he does is to carry 15% of his asset allocation in cash. He uses the cash to invest in the market when corrections (significant dips) occur, buying undervalued shares. Nice idea!

Thanks to everyone for participating and for reading! Hope you enjoyed the posts.

You can submit your posts for the 10th (July) edition of the Carnival of Value Investing using the submission form either at Blog Carnival or at the Canadian Finance Blog Carnival Workaround.

    ***Photo courtesy of http://www.flickr.com/photos/thewalkingirony/3051500551/sizes/z/in/photostream/

    Comments

    1. Thanks for including my post in the Carnival, Jacob!

    2. Half Assed Economist says:

      Thanks for subscribing to my blog. I have added you to my blogroll. I hope that's OK!
      My recent post Economic Theories – Oh My!

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