My 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