Tag Archives: exit strategy

A Buy & Hold Approach to Value Investing

buy-sell-hold-diceMy usual approach to dealing with investments is to take a proactive approach to both position management and exit strategy. There are many investors however who prefer to take a much more passive approach to their holdings. Value Investing does not necessarily need to be extremely complex or require constant monitoring / action by those who partake in its methods. In this post we’ll look at a method that more passive investors can take towards value investing using a buy & hold mentality.

For the purposes of our discussion today, we’ll define buy & hold to mean forever, i.e. 15+ years. We will use traditional stock valuation strategies to select excellent companies at a price that represents good value. Instead of actively managing the position however, we’ll adopt a buy & hold approach, attempting to accumulate even more every time the stock is undervalued. This may be a more palatable approach for the passive investor who wants to spend a minimal amount of time and effort managing her portfolio, but wants to retain overall control (as opposed to mutual funds for example). Continue reading

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Position Management using Intrinsic Value

LED exit signThere was an interesting article written a way’s back on the Long Term Value Blog which noted how most value investors spend an inordinate amount of time focused on the entry, and a disproportionately small effort on both the exit and analyzing exit timing. I am going to attempt to dedicate a series of articles towards position management and exit strategy.

Absolutely critical to returning a profit on any investment is proper position management. Entry strategy, position sizing, and exit strategy (both to minimize losses and to capture a profit) are key aspects to a complete system. We’ve already looked at a simple method for entry into a value position, so now let’s look at managing an existing position and eventual exit. Specifically we’ll look at an approach based completely on the stock’s intrinsic value, with action based on how that value changes over time. Continue reading