Rewards Found in Value Investing for the Patient Investors
by Tom Murcko
Value investors tend to buy stock in companies whose value the rest of the market doesn't yet appreciate. Obviously there's no guarantee that the rest of the market will wake up and realize the value in the future. In reality, most large gaps between intrinsic value and market price do close within a year or two. But even if it doesn't, if the value is really there, the company's management may appreciate it and buy back shares. Or another company may appreciate it and acquire the company. Or if none of these things happen, the company presumably will eventually start paying increasingly large dividends. So for the patient investor, buying at a substantial discount to perceived intrinsic value and then holding until others discover the value is a solid strategy.
