The Value Investor’s #1 Advantage

Welcome to Episode #21 of the Value Investor Podcast Every week, Zacks value stock strategist and the Editor of Zacks Value Investor portfolio service, Tracey Ryniec, talks about all things happening in the value stock universe, including her top stock picks. Recently, she read an interesting article by John Huber, a portfolio manager at Saber Capital Management, which focuses on value investing, called: What is Your Edge. It listed 3 ways investors can gain an advantage in stock investing. They are: 1. Informational Advantage 2. Analytical Advantage 3. Time-horizon Advantage He believes that most investors only focus on the first advantage, information advantage, to their detriment. In the Internet age, where nearly everyone has access to information and data on companies, it’s nearly impossible to actually come up with “new” information that other investors don’t yet have. There are few unknowns. Because of that, getting an advantage based on information is almost impossible to do. But the #3 advantage, the time-horizon, is often overlooked by investors. Most investors have no patience. Are you willing to hold for several quarters, as long as the fundamentals remain solid, even if the stock isn’t doing much? Not many are. This is where value investors who have patience get their advantage. 3 Stocks Where Patience Is a Virtue 1. Aetna (AET) traded in a narrow range for 16 months before finally moving higher after the election. It has a forward P/E of 15.9. 2. AMN Healthcare (AMN), the medical staffing company, hasn’t gone anywhere even though it has beat on earnings and is expected to grow EPS by 44% this year. It has a forward P/E of 16.5. 3. Disney (DIS) was on a tear for several years but has traded between $90 and $105 for most of the last year. It has a forward P/E of 17.5. Do you have the guts to stick it out with a company when the fundamentals still look solid? Professional managers usually can’t have patience. They have to produce a certain performance quarter after quarter, even if it involves “window dressing” where they buy certain positions just to make the portfolio look good. But you don’t have these restrictions. You can have patience and hold for a longer time period. There are no end-of-the-quarter numbers to publish. The only person you have to impress is yourself. There are so many traders, and computers, which are trading stocks that it is nearly impossible to get an advantage over them. But you don’t need to. Your advantage is if you actually don’t trade. You gain the edge by having a different time-horizon. Time is your friend. Find out more of Tracey’s advice about the advantage of time on this week’s podcast. Aetna: https://www.zacks.com/stock/quote/AET?cid=cs-soundcloud-ft-pod AMN Healthcare Services: https://www.zacks.com/stock/quote/AMN?cid=cs-soundcloud-ft-pod Disney: https://www.zacks.com/stock/quote/DIS?cid=cs-soundcloud-ft-pod Follow us on StockTwits: stocktwits.com/ZacksResearch Follow us on Twitter: twitter.com/ZacksResearch Like us on Facebook: www.facebook.com/ZacksInvestmentResearch

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