3 Ways Investor Expect to Profit through Stocks 4 Criteria for Evaluating Arbitrage Situations

4 Common Traits of Value Investors

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Traits of value investors:
1. We tend to buy what is out of favour rather than what is popular.
2. We focus on intrinsic company value and buy only when we are convinced we have a substantial margin of safety, rather than trying to guess where the herd will go next.
3. We understand and profit from reversion to the mean rather than projecting the immediate past indefinitely into the future.
4. We understand beating the market requires a portfolio that looks different from the market and we recognise that truly great investment ideas are rare. Thus, we invest heavily in our handful of best ideas and don't hide behind the "safety" of closet indexing.
5. We are focused on avoiding permanent losses and on absolute returns, rather than outperforming a benchmark.
6. We typically invest with a multi-year time horizon rather than focusing on the month or quarter ahead.
7. We pride ourselves on in-depth and proprietary analysis in search of what Michael Steinhardt calls "variant perceptions", rather than acting on tips or relying on Wall Street analysts.
8. We spend much of our time reading – business publications, annual reports, and so on – rather than watching the ticker or the television.
9. We focus on analysing and understanding micro factors, such as a company's margins and future growth prospects, and not trying to predict the direction of interest rates, oil prices, the overall economy, and so forth.
10. We cast a wide net, seeking mispriced securities across industries and types and sizes of companies rather than accepting artificial limitations on market capitalisation or other criteria.
11. We make our own decisions and are willing to be held accountable for them and do not just seek safety in whatever everyone else is buying or decision making-by-committee.
12. We admit our mistakes and seek to learn from them.