There are currently around 40 000 companies listed on stock markets across the world.
Having a lack of choice, when buying shares, is clearly the least of your worries. Finding value, on the other hand, might be a problem. Value is the one thing every investor is searching for and finding it between the thousands of listed companies isn't child's play.
Investors frequently make the wrong decisions, based on all the information laced around the constant flux of the markets. They follow the herd of others, buying when share prices are going up and selling when they are going down. This emotional response to the inevitable volatility of the stock market effectively turns it into a roulette wheel. As 3D value investors, we don't gamble with our money, we play it safe and enjoy market-beating returns. So what exactly is 3D value investing?
The following is an excerpt from our eBook, 3D Value Investing: Triangulating the Best Investment Targets.
Defining 3D Value Investing
No investment is totally risk-free. But by employing the rules of 3D VI, prospective investors minimise risk by understanding the true, fair value of a business through fundamental analysis. We learn what the share price should be and therefore only buy stock when it is being sold at a discount. Finally, we sell the stock when trends are driving the price up; the time when other investors are being urged to buy.
3D Value Investors (3D VIs) are aware of the inevitable waves of market activity. They observe trends and patterns and still enjoy reading analyst opinion. But they only select investment opportunities based on solid financial fact using an effective valuation methodology and only act when the time is right.
While we are fascinated by all theories regarding the ebb and flow of the markets, 3D VIs do not invest based on:
- Analyst opinion
- Herd mentality
3D VI is all about hard facts. Using the three dimensions of 3D VI, we triangulate the healthiest businesses for investment, the fair value of those businesses and the best times to buy in and sell out.
We have extensively studied traditional value investing methodologies, developed them further and refined them. Through our own experiences as investors we have established new processes of fundamental analysis, business valuation and timing, to create 3D Value Investing.
Warren Buffett said: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Our 3D VI expert says: “I disagree. Buffett has limited his investment horizon, focusing on only specific sectors in the USA and UK, which is perhaps why he holds this view. The 3D VI universe is far more expansive. We think you can buy any company at a fair price, as long as you’re prepared to wait until the right time.”
If you want to learn more about the concept of 3D Value Investing, download our complimentary eBook by clicking on the image below.