Financial Intelligence
Turning Setbacks into Success: How to Profit from Undervalued Investments
Hello and welcome to another year.
Last time, we talked about celebrating and giving. You can find that by clicking the tab below.
Today, we discuss ‘Value investing’.
“I am Lady Wisdom, and I live next to Sanity; Knowledge and Discretion live just down the street. The Fear-of-God means hating Evil, whose ways I hate with a passion— pride and arrogance and crooked talk. Good counsel and common sense are my characteristics; I am both Insight and the Virtue to live it out. With my help, leaders rule, and lawmakers legislate fairly; With my help, governors govern, along with all in legitimate authority. I love those who love me; those who look for me find me. Wealth and Glory accompany me— also substantial Honor and a Good Name. My benefits are worth more than a big salary, even a very big salary; the returns on me exceed any imaginable bonus. You can find me on Righteous Road—that’s where I walk— at the intersection of Justice Avenue, Handing out life to those who love me, filling their arms with life—armloads of life!
https://bible.com/bible/97/pro.8.12-21.MSG
Value investing is a strategic approach where investors seek out undervalued assets, whether in real estate or business, with the goal of purchasing them at a discount, improving them, and holding them as part of a long-term portfolio. This method is built on the principle of identifying hidden potential, investing wisely, and creating lasting wealth. It requires patience, research, and a solid understanding of the market to ensure that the investment grows in value over time.
One of the key areas where value investing thrives is in real estate. Investors look for distressed properties—those in need of repairs or held by motivated sellers—buy them below market value, renovate them, and either sell for a profit or keep them as rental properties. A common rule of thumb in real estate investing is the After Repair Value (ARV) formula, which states that an ideal purchase price should be 70% of the after-repair value minus the cost of upgrades (ARV multiplied by 70% minus upgrade cost). This ensures a safety margin that allows for profitability while mitigating risk.
The same principles apply to businesses. Investors search for companies that are underperforming due to poor management, lack of marketing, or operational inefficiencies. By acquiring these businesses at a discounted price, restructuring them, and optimizing their operations, they can turn struggling companies into profitable enterprises. Just as in real estate, the key is to buy low, add value, and hold for long-term gains.
Beyond just financial gains, value investing is an intelligent approach because it builds sustainable wealth. Unlike short-term trading, which is often speculative, value investing ensures that assets appreciate over time, providing passive income and financial stability. It also teaches financial discipline, patience, and the ability to analyze potential investments critically.
Find the hidden gems so rare,
Buy with wisdom, take great care.
Fix it up, let value rise,
Watch your wealth touch the skies!
For those interested in value investing, the first step is financial education. Learning from experienced mentors, understanding financial statements, and researching market trends are crucial to success. Whether in real estate or business acquisitions, informed decisions backed by careful analysis will always lead to financial growth. The call to action is clear: look for value, invest wisely, and build wealth strategically.
This is worth more than gold, It is a treasure I must keep. Thank you for this.