Using Cash as a Strategic Asset in a Value Investing Strategy Portfolio

Using Cash to Increase as a Strategic Asset in a Value Investing Strategy Portfolio

Value InvestingLeave a comment

One of the least discussed secrets of great practitioners of the value investing strategy is the use of cash, cash equivalents, and bonds to augment returns. From Benjamin Graham and Warren Buffett to Wallace Weitz and Marty Whitman, intelligent use of excess funds has as much to do with growing your capital over the long run as does selecting individual common stocks. We’re going to look at some of the techniques that have been used by value investors to manage their reserves, and the role played in the overall portfolio.

Earnings Yield as a Value Investing Strategy Article

Earnings Yield as a Value Investing Strategy

Value Investing10 Comments

Many famous portfolio managers that practice a value investing strategy have said they think of stocks as “equity bonds”. Instead of receiving a fixed rate of return, like you would when you buy a traditional bond, you receive a variable return based on the company’s underlying profit. This approach makes it easier to value a business. The most common starting point for the valuation process is calculating a financial ratio known as earnings yield. In this article, you will learn what the earnings yield ratio is, how to calculate it, and why it is important to so many value investors.