Value investing is not meant to be comfortable

Investors should not be afraid of taking risks

Successful value investing requires that you both identify undervalued companies that the market has chosen to dismiss, and then continue to hold them until the market adjusts its thinking.

By definition, this can mean extended periods where you have to wait for an investment to perform. However, if you are correct, the long-term rewards can be significant. The critical question to ask is not, 'is this a great company?', but rather, 'is this a great price?' Graph one (below) plots the ten-year compound real return against the starting price-to-earnings ratio (P/E) of the FTSE All-Share index for every year since 1974. The trend line is clear. If you 'buy low' you stand a much better chance of 'selling high'.  We are at the end of a 'value-down' cycle However, this ...