This is a term on the rise in the equity markets because many investment portfolios are looking to this characteristic to carry out their strategies in the markets. But do we really know what is behind the word value? Well, the value investing, or investing in value, is an investment trend that consistently generates positive returns over the long term. It is said that a security is value when it is listed below its possibilities and this is something that happens with some frequency in companies that are listed on the Spanish equity market.
One of the first characteristics that value investing contributes, or investment in value, is its greater potential for revaluation. It is far superior to the other investment proposals. To the point that on many occasions they reach quote with discounts above 20% or even with higher intermediation margins. This is one of the most relevant reasons to be very interesting for small and medium investors. That is to say, they are very profitable bets and although it may not be so in the short term, everything indicates that they will reach their real prices in the medium and especially long term.
On the other hand, value investing, or investment in value, is a very innovative way of approaching investments in the stock market. From a more modern strategy that has been imposed in many investment portfolios as a formula to create value in the financial markets. From this perspective, there is no doubt that the share price, in the long term, will tend to reflect the real value of the company. This process of convergence between price and value It is the one that generates the profitability that we hope can be given in an objective and balanced way.
Value value: its advantages
One of the benefits of opting for this special investment strategy is that in the end the profitability that we can obtain may be much higher than if we choose another system of choice. Not surprisingly, they are securities that for one reason or another are listed below your target price. It is a conjunctural process that at any time can be corrected and show an upward trend that manages to scale heights or levels much higher than until now. In any case, what seems clearer is that they are less prone to developing strong downtrends.
One of the keys to its correct identification is that the investor with the greatest learning in trading on the stock market must distinguish between what are variations in the real value of a company and what simply are fluctuations in its price. Because they are different things that can at some point distort the configuration of their prices. To the point that there may be differences between one or another contribution model of 20%, 30% or 50%, depending on the case. Therefore, it is a very smart way to boost investments in the equity markets. Both national and outside our borders and that can help you channel your operations in these financial assets.
Wait for price appreciation
Another effect of investing in this special class of securities is that a small and medium-sized investor with a long-term horizon can benefit from investing in value. How? Well, in a way as simple and practical as it is by selecting good companies, acquiring them at a good price and above all diligently waiting for the price to converge with the intrinsic value of the company. Patience is the fundamental weapon with which a strategy of these characteristics must be developed. The key is to look for quality stocks that are trading below their true price. And this is something that occurs with some frequency among the values of national equities.
While on the other hand, value investing, or investment in value, rarely generates speculative movements of great intensity and especially during very long periods of time. We will have a high security that sooner or later a fair price will be reached as a reward for our permanence in the value of the stock market. On the other hand, it should not be forgotten that these securities, in general, belong to the highest capitalization and that they move many titles in all trading sessions. With high liquidity and that allows us to enter and exit them without special difficulties.
Integrated in investment funds
Another aspect that should be assessed from these is that value investing, or investment in value, is part of many portfolios in investment funds. They are the funds known as value or value, being another very effective strategy to make the savings profitable through this financial product. Where, the portfolios powerful gifts, with wide safety margins, protect investors in value both from the volatility of the markets and from possible investment errors. All this is much more feasible from investment funds that want to buy and sell shares on the stock market individually.
On the other hand, through investment funds of these characteristics, a greater diversification of investment can be achieved. Through proposals from different sectors, level of capitalization and even how to manage your business line. Very effective to circumvent the scenarios of increased instability in equity markets. In this sense, more and more investment funds have in value investing, or investment in value, their source of reference to develop their investment portfolio. Through investment strategies that notably digests the more conventional approaches in financial markets.
It is, therefore, an alternative that can be very profitable to defend our interests in the equity markets. With many followers who are appearing in recent months due to the doubts that arise to make their available capital profitable. To the extent that value investing, or investment in value can be a solution to our problems from now on. With infinite options that meet all these characteristics that we have stated in this article. With a very clear objective: to make money on the stock market and the more the merrier. In this sense, there are more and more investment funds that have in value investing, or investment in value
A clear example of value: Santander
In the first half of the year, the interest margin was 17.636 million euros, 4% more than in the same period of the previous year, while credit and customer funds grew 4% and 6%, respectively, in constant euros (that is, excluding the impact of exchange rates). In the second quarter, the bank increased the number of customers by one million, with Santander now serving 142 million, more than any other bank in Europe and America.
While on the other hand, all digital services have been grouped into the new Santander Global Platform unit to drive the strategy. The digital adoption it has continued to grow in the semester and there are already 34,8 million clients that use Santander's digital services. On average, 240 customers access one of the bank's mobile or digital platforms every second, representing an increase of 28% in the last 12 months. Where credit quality continued to improve, with a reduction in the delinquency rate of 11 basis points in the quarter, to 3,51%, while the cost of credit remained stable at 0,98%.
With new restructuring costs
On the other hand, the business results of the financial group show that the CET1 capital ratio is now at 11,30%, 50 basis points more than a year ago, and Santander remains one of the most profitable and efficient banks in the world among its peers, with a return on ordinary tangible capital (RoTE) of 11,7%, and a ratio of efficiency of 47,4%. After the net charge of 108 million announced in the first quarter, the bank has recorded a new charge of 706 million in the second quarter, mainly for restructuring costs expected in Spain and the United Kingdom (626 million euros), and additional provisions for payment protection insurance (PPI) in the United Kingdom (€ 80 million).
In any case, these charges caused a fall in attributable profit in the second quarter of 18% year-on-year, up to 1.391 million euros. Excluding those charges, second quarter ordinary profit was 2.097 million euros, 5% more than the same quarter of the previous year: the highest quarterly ordinary profit since 2011, driven by strong credit growth in Latin America, an improvement continued profitability in North America as well as reduced costs in Europe.