Buy and Hold vs Value Investment in the Stock Market???

Question

Hello BP! I would like to start a debate on Buy and Hold investing vs Value Investment in the Stock Market.

I have read multiple investment books (Rich Dad Poor Dad, The Richest Man in Babylon, etc...) and I am certain that investment is the key to having a stable financial future. I have a career going on so I am not interested in full time RE (flipping houses or wholesale) and trading stocks, I am leaning in long term investing.

In my market, it is rare to find Buy and Hold deals with significant cashflows (it is similar to Boston, NY or Los Angeles market). What do you think are the minimum Cap Rate and Cash on Cash ratios you have to get to invest in Buy and Hold over Value Investment in the stock market??

For those not familiar to Value Investment, it is the kind of investment style that Warren Buffet does where you analyze balance sheets, annual reports, dividends and stock price to figure out intrinsic value of a company in order to find a stock that is undervalued and can potentially grow over time (you can expect around 10% returns).

Steve Vaughan · Answer

As soon as they'll lend 10:1 for stock market investing while giving me full control and the best tax benefits on the planet all at the same time, I'll resume investing there ;)

Russ Draper · Answer

If there are no good deals where you are, look for areas that have them!  Don't be afraid to invest farther away (I invested over 1000mi from my home)!

For the stock market: my advice, buy "The Little Book of Common Sense Investing".  The lesson to be learned from that is in chapter 1.  Buy the same amount of a index fund such as the S&P 500 or DJIA at the same time each month and you will be over 90% of investors in the market.

Michael Lee · Answer

Hello and welcome to BP!  You are right that diversion is very important for most people.  I agreeee with Robert Kiyosaki that learning about the whole financial market and most people are ignoring what is really going on and the fact that most "accredited" investors are just ignorant salespeople who are telling most people the wrong thing and just selling a product or service that cannot be beleived what they are saying and are only concerned about themselves and their ignorance or the real world that we live in.

I am sorry but I am 60 years old and opinonated about honesty and the truth.  There are other ways to make more money that can return better than banks.  Yes, real estate is the best way to invest but there are other ways to get a decent return on your money and expect better returns than the banks are paying.  Things like annuities and precious metals should be invested in and give decent returns.  More people are using the Internet to make emotional sales and are crooks that a really looking only at what they will make.  I have been on the Internet 8 to 10 hours a day on the int rent and that is about 1/2 of what I am seeing and people need to be aware of that and a bunch of people are getting away with what the crooks are doing.

I have also learned that everything is sold and taking advantage of most people and their emotions.  Bad people are not honest and looking for a way to make money a simpler way and learn how to sell to ignorant people.  Anywhere there is money crooks will be found.  Be educated at what you need to know and ask that person what their experience is.  You cannot expect to be taken into something that is honest about its intent.  My wife has been so brainwashed by others including teachers she is unable to get think differently.  She is very frugal and been saving money for than 25 years but has all of her money in the stock market only and is difficult to make her be diversified.  I forgot to mention that that time on the Internet was for 7 day weeks while I recover medically.

Know that just putting money in the stock market is not investing.  If you are not receiving returns into your pocket you are being taken advatantage of.  I know I am being a little opinionated at what I have to say but I just feel that way right now and that real education is important.  Do not beleive what you are being told by politicians or see on TV.  Most of the people you see are just salespeople that only care about themselves.  Just be brave and keep it simple.  Do what has been proven right and has been truly successful.

Good luck to you!

Andres Duque · Answer

@Arpan Patel It makes sense. I am starting to invest in real estate but I would like in the future to diversify by investing in other markets. I do believe that real estate is the best investment you can find and the three financial reasons you mentioned cannot be found any where else.

Arpan Patel · Answer

I would certainly not defend it (plus I'm not sure you will find too many advanced value traders on this platform) because there is also the lack of control. I don't know the board of say Tesla and what they really plan to do but I do know the owners of my company and the managers of my assets and have control over those decisions. I like to be in charge of my future for better or for worse. Secondly, there are ways to insure your investments in the market but not typically done versus real estate where the insurance products are well priced because of how often they are purchased. I don't know the last time my friends who are in the market bought a bunch of naked puts to cover their investments. In addition to well priced leverage, control and insurance are what makes me like real estate so much. (naturally there are others but these are the big financial themed ones)

Andres Duque · Answer

@Russ Draper I have seen that book recommended in other places, I am going to start reading it this month.

@Steve Vaughan Yep, very good arguments. The leverage you can have in real estate has no match elsewhere.

No one to defend value investing???

Buy and Hold vs Value Investment in the Stock Market???

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