{"id":10584,"date":"2025-08-25T11:21:55","date_gmt":"2025-08-25T05:51:55","guid":{"rendered":"https:\/\/www.thewallstreetschool.com\/blog\/?p=5097"},"modified":"2025-08-25T11:21:55","modified_gmt":"2025-08-25T05:51:55","slug":"value-investing-beginners-guide","status":"publish","type":"post","link":"https:\/\/www.thewallstreetschool.com\/stg-new\/value-investing-beginners-guide\/","title":{"rendered":"What is Value Investing? A Beginner\u2019s Guide to Building Wealth"},"content":{"rendered":"\n

If you have ever gone to a market and found a good product selling at a cheaper price than usual, you know how exciting that feels. That idea is what value investing is all about, but instead of buying vegetables or clothes, you are buying shares of companies.<\/p>\n\n\n\n

By learning this approach, you can learn to earn<\/strong> steadily over time by making smart investment choices.<\/p>\n\n\n\n

So, What is Value Investing?<\/strong><\/h3>\n\n\n\n

Value investing is when you buy shares of a company that you believe are worth more than their current price. Think of it like buying a \u20b9100 note for \u20b970. You know the value is more, but the market is selling it for less.<\/p>\n\n\n\n

The famous investor Warren Buffett<\/strong>, who built his fortune using value investing, says, “Price is what you pay. Value is what you get.”<\/em><\/p>\n\n\n\n

The key is patience. Value investing is not about jumping on \u201chot or hyped\u201d stocks or chasing short-term profits. It\u2019s about long-term thinking<\/strong> and making sure you buy good companies at the right price. Learning this approach helps beginners learn to earn<\/strong> consistently rather than gambling on trends.<\/p>\n\n\n\n

For example:<\/strong>
<\/strong>During the COVID-19 crash in March 2020, Maruti Suzuki shares fell from \u20b97,000 to below \u20b94,200 even though it is a famous car company in India. People who bought then and held on are seeing their shares worth \u20b914,000 or more in 2025.<\/p>\n\n\n\n

Why Does This Happen?<\/strong><\/h3>\n\n\n\n

Sometimes the stock market gets emotional. Bad news about the economy, a temporary drop in profits or even rumours can push a company\u2019s share price down, even if the company is strong. Value investors take advantage of these situations.<\/p>\n\n\n\n

For example, during the 2008 financial crisis<\/strong>, many good companies\u2019 stock prices fell by more than 50%, even though their businesses were solid. Those who bought at that time and waited saw their investments grow a lot in the years that followed.<\/p>\n\n\n\n

According to a Morningstar study<\/strong>, from 1926 to 2022, value stocks in the US returned an average of 11.2% per year<\/strong>, compared to 9.8% for growth stocks<\/strong> (Morningstar, 2023<\/a>).<\/p>\n\n\n\n

Learning these patterns is a key way to learn to earn<\/strong> better as an investor.<\/p>\n\n\n\n

Why Do Stocks Become Undervalued?<\/strong><\/h3>\n\n\n\n

In the Indian context, share prices fall below real value due to:<\/p>\n\n\n\n

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  1. Market Overreactions \u2013 e.g., Avenue Supermarts (DMart) dropped 25% in 2020 despite rising sales, due to COVID fear (BSE Data<\/a>).<\/li>\n\n\n\n
  2. Economic Downturns \u2013 Cyclical sectors like steel\/cement (e.g., Tata Steel) often fall hard in slowdowns.<\/li>\n\n\n\n
  3. Industry Worries \u2013 e.g., Pharma stocks like Sun Pharma faced undervaluation during US-FDA issues (2015\u20132017).<\/li>\n\n\n\n
  4. Short-term Setbacks \u2013 Infosys in 2017 fell ~15% after CEO Vishal Sikka resigned, though long-term growth remained intact.<\/li>\n<\/ol>\n\n\n\n

    Value investors take advantage of these times and learn to earn<\/strong> by buying quality stocks at discounted prices.<\/p>\n\n\n\n

    How Does Value Investing Work?<\/strong><\/h3>\n\n\n\n

    Value investing is simple to understand but requires discipline. Here\u2019s how it works:<\/p>\n\n\n\n

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    1. Find quality companies <\/strong>\u2192 steady profits, low debt, strong brands.\n