Tools for value investing is critical. Value investing takes time and effort, the right tools can help you analyze more stocks quickly. Which is critical for finding the right deal, at the right time. As a value investor you’ve no doubt found yourself trying to find online tools to help you along to find that great deal. Hopefully this article will help you find the right tools to find the right deal.
But first lets get into Value Investing, a style of investing that seems to have been lost with time in today’s investor behaviors. Learning how to value invest can be difficult. The majority of the news and information around the stock market is overwhelmed by growth investors, and it’s had serious impact on the behavior of investors. Most investors have unrealistic expectations of buying that one stock that will give them an unreal 1,000% return. Let’s be honest though, picking a stock like that is nearly impossible. So some of us are left trying to build are nest egg the slow and steady way, using the value investing approach. But again, in today’s market all the attention is on growth investing and finding reliable information on value investing can be difficult. In order to help provide the best information possible, we’ve accumulated a list of tools for value investing, that should help you value all the companies you want!
Benjamin Graham’s Formula
Benjamin Graham’s formula for finding the true value of a stock, from his famed book Security Analysis, is like the holy grail for value investors, and quite possibly the biggest tool in the “Tools for Value Investing” toolbox. The formula itself seeks to find the intrinsic value of stocks, or simply put what price a stock should be sold at. Benjamin Graham also authored another book which is not as lengthy, yet just as filled with wisdom. Benjamin Graham’s The Intelligent Investor as proven to be of major influence on one of the most influential investors, Warren Buffet. Yet for an investor just beginning it can be quite difficult to understand value investing. With that being said we, of course, are going to provide you with the best resources we could find to build your knowledge.
Nasdaq– Yes, that’s right folks, the financial masterminds at Nasdaq have written a thorough article to make sure that you fully understand the ins and outs of Benjamin Graham’s formula. How it works, how it’s misunderstood and how it should be applied. This is a great first step to understanding how the formula works.
Valuewalk– A really good value investing blog that provides a Benjamin Graham formula stock screener, so that you can input all your data for each stock your eyeing and decide whether or not it meets the Benjamin Graham test.
The Metrics of Value Investing
Let’s be honest, value investing means dealing with plenty of numbers and ratios. It’s important to be able to understand where these numbers and ratios came from, how they’re calculated and what they mean. There are plenty of resources out there that will be able to help explain this, and we’ve built a list that should help you along the way as well. The only thing we ask is that you don’t base your stock trading decisions on the Buy, Outperform, Neutral, Underperform, and Sell analyst opinions. Be your own analyst and make your own informed decisions, the internet as a wealth of knowledge, be sure to use everything at your disposal.
When you start to delve into the inner-workings of a company and the financial statements of them it can get complicated, quickly. Luckily our value investing hero, Benjamin Graham, has written us yet another book The Interpretation of Financial Statements and his mentor, Warren Buffett influenced a similar book Warren Buffett and the Interpretation of Financial Statements. If either of these aren’t the best option for you then there are plenty of educational resources about accounting available. Here are a few:
Michigan State University
Utah Valley University
Dividends are a crucial part of value investing, knowing how to calculate the benefits of dividends and how they impact your portfolio can mean a nice return, despite where the market is at. Here are a couple of our favorite dividend calculators that have helped us properly evaluate the dividends of stocks.
Dividend– This is a great site for serious dividend investors, the only down side is that there is a lot of premium subscription based content. Other than that it offers plenty of insight into the ins and outs of dividend investing. The site provides a lot of information on the strength of a company’s dividend, how to build a portfolio around dividend investing. It’s almost a one-stop shop for investors who want to get serious about their dividends.
Dividend Ladder– Another popular dividend site, similar to Buyupside but different in many ways. The site has an awesome Dividend Income Tracker which helps user identify when they’re getting their dividends and where they are coming from in their portfolio, really a unique tool.
Buyupside– This is an awesome site that is very comparable to dividend.com, but without the price tag. It offers a lot of technical insight into dividend investing and plenty of tools to help investors buy the right stock at the right time. It also has plenty of calculators and unique tools to help you make the best decision.
In the end value investing heavily depends on investors having a solid foundation of financial knowledge. Hopefully these resources will prove to be solid tools for value investing for you. We wish you the best of luck in your investing endeavors! Please let us know if there are any other tools for value investing that you have found useful, we would love to spread the word!