4 investing principles that Jeremy Siegel shares with his readers and students
value stocks are frequently underestimated by the market. This occurs because investors often concentrate excessively on a company's growth potential, leading them to pay a premium for stocks expected to experience rapid future growth. Consequently, value stocks may be undervalued relative to their actual worth, presenting an opportunity for investors to acquire them at a discounted price.
While there is no assurance that value stocks will consistently outperform growth stocks, there are instances, particularly in periods of economic expansion, where growth stocks may exhibit better performance in the short term. Nevertheless, over the long term, value stocks have consistently demonstrated their ability to deliver superior returns. Establish clear rules for your portfolio.
While there may be temptations to buy during bullish periods and sell during bearish phases when emotions run high, it is crucial to resist these impulses. The temptation to monitor your investment portfolio daily can prompt emotional decision-making. Instead, consider checking your portfolio occasionally to ensure you are on course to achieve your long-term goals.
The optimal solution is to create an investment plan detailing your investment goals, time horizon, and risk tolerance. This approach will spare you from the distress and pitfalls of excessively churning your portfolio. Just avoid emotional investing and make rational decisions that align with your financial goals.
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