Pros of Value Investing
- Find devalued assets when others are panicking.
- Avoid the hype and herd mentality.
- Day-to-day price fluctuations and market volatility are not much of a concern to value investors because they are focused on the value of a business instead of external factors.
Cons of Value Investing
- It can be difficult to determine if a stock has bottomed out or could continue falling further down.
- The value company’s price could underperform for many years or may never rise.
- May lose out on larger gains due to searching for companies with a margin of safety.
- Poor liquidity due to the stock’s underperformance or low market cap.
- Extensive fundamental research required.