It takes a lot these days to separate us from our heard-earned dollars. That’s why it’s in everyone’s best interest to not only understand where every dollar goes, but where we can all get the most bang for our buck.
Value funds are made for the long term. They shouldn’t be used by anyone expecting a quick profit. After all, the most decisions you will make as a value investor will be to not do anything at all.
So which types of stocks are typically considered value plays? It would seem right now that financials are undervalued, but Terranova warns against this. Financial companies still have a bleak road ahead of them due to all the remaining toxic assets on their books and high debt levels. Their earnings expectations might never come to fruition, he says. If you want a value play, instead look to companies with low debt levels and lots of cash on hand. These tend to be infrastructure, energy, healthcare and pharmaceutical stocks.