Myth: Value investing is buying cheap, low valuation stocks

This myth is synonymous with value investing - almost unshakeable. Scores of investors believe value investing as propounded by Warren Buffett means buying low P/E and low P/B stocks. That belief is now so ingrained that the cheaper the stock they find, the brighter the prospects become, believe some investors. Busting the Myth Allow us to give you some historical background why this belief persists to this day. Benjamin Graham, the father of value investing proposed the "cigar-butt" approach. This involved picking up discarded stocks that were trading at below their net current assets and selling these stocks at a profit. The most famous practitioner of this style of investing was Walter Schloss who had worked with Graham. Using this technique, Schloss netted a return of

This article was originally published on May 19, 2020.