Value Investing and Values-Based Investing Gain Momentum

Investors are looking for stocks that are underpriced, and more of them want to invest not just in value, but also in values.

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The new paradigm of investing takes into consideration both sides of the proverbial coin: the quantitative and the qualitative. Investors are looking back at historical returns and are also looking forward at the future implications of their investments, reviewing both the numbers and the narratives.

They’re already familiar with the quantitative side of the coin — returns, yields and percentages — and they’re becoming increasingly interested with the qualitative side of the coin — business objectives, culture and practices. The new paradigm of investing focuses on both compounding interest and interests — value investing and values-based investing.

People mainly invest their money to preserve and grow their wealth. Investing cash gives your money the potential to increase in value and outpace inflation. Outpacing inflation is top of mind for everyone these days, as we continue battling the inflation dragons heating the economy. When investment returns don’t outpace the inflation dragons, the loss of purchasing power ensues. When investment returns do outpace the inflation dragons, the gains contribute to wealth creation.

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For these reasons, it's incredibly important to consider returns, yields and percentages when investing. Investors construct their investment strategy based on various factors such as risk tolerance, financial goals and investment time horizon. An investment strategy may include value investing, depending on the desired strategy and the market cycle.

What Is Value Investing?

Value investing is the buying of stocks that appear underpriced relative to a company’s fundamentals. Value stocks are equities trading at a lower price than their intrinsic value. Essentially, the stock appears to be “on sale.”

To determine whether a stock is underpriced, analysts and investors look to quantitative metrics such as: price-to-earnings (P/E) ratio, price-to-book (P/B) ratio and earnings per share (EPS).

Qualitative factors are also taken into consideration — cyclical business, headline news and the overall market cycle.

What’s particularly interesting at the moment is the financial sector. The financial sector is value-dominated, and analysts and investors have a close eye on bank stocks as we continue seeing bank failures and acquisitions.

Value investing tends to get more attention during bear markets and high inflation. Given the current market, value investing is gaining emphasis in investment conversations.

What Is Values-Based Investing?

What’s also gaining emphasis in investment conversations is that of values-based investing. Values-based investing is the buying of stocks that align with your personal fundamentals and core values. This investment approach invites the investor to consider factors on the qualitative side of the coin.

To determine whether a stock is aligned with your values, you might consider a company’s business objectives, culture and practices.

For example, perhaps a detergent company tests its products on animals in an inhumane way. This company’s practices may not be something that you want to get behind. You vote with your wallet when you decide to invest in company A over company B. This is powerful. And with so many investment options available today, it’s easier to invest in companies that align with your values, all the while achieving your portfolio objectives.

Value and values-based investing are gaining momentum in the current environment. (For more about this, see the article Value Investing Is Back.)

Market volatility, bear markets and high inflation are usually catalysts for revisiting your investment portfolio. Many investors are doing so with both value and values in mind, truly considering both sides of the proverbial coin.

Optimizing for wealth creation and positive impact for the future is more accessible now than ever before. As we slay the dragons and escape the bears, it’s possible to run toward a prosperous and sustainable future.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Jennifer Wines, JD, CPWA®
Founder, Invisible Wealth

Recently named one of the Top 100 Women of the Future, Jennifer is a certified Private Wealth Advisor who founded Invisible Wealth, which provides strategic, future-forward, consultancy services. Jennifer has worked at some of the top Private Wealth Management institutions in the world, namely Goldman Sachs, JPMorgan and Fidelity. She earned her Juris Doctor from Suffolk University Law School in Boston and her Certified Private Wealth Advisor designation from Booth Business School in Chicago. While at Fidelity, she developed a proof of concept and prototype for an enterprise solution, which was advanced into incubation.