For the past 7 years, a handful of great companies have doubled their earnings and have seen sales go through the roof...

Yet their stock prices are trading like it's 1999!

Let me show you how to uncover these and other hidden values in the stock market.

My name is Charles Mizrahi.  I’m editor of Hidden Values Alert and the author of Getting Starting in Value Investing (John Wiley & Sons).  Most of my day is spent reading annual reports and SEC filings so I can uncover companies that are selling at fire sale prices despite amazing earnings and sales growth! The stock market has not recognized the underlying worth of their businesses.

Charlie Munger (net worth $1.6 billion), vice chairman of Warren Buffett’s Berkshire Hathaway, said at a recent shareholder meeting, “All intelligent investing is value investing—to acquire more than you are paying for.”

If you are buying stocks without knowing the worth of the business, you are walking in the dark.  How can you expect to make money in the stock market if you don’t know if you are getting more value than you are paying?

The 3 Greatest Value Investing Lesson

Great value investors over the past 70 years followed the lessons of Benjamin Graham, Warren Buffett’s teacher.  When searching for hidden values keep these 3 things in mind:

It's not a blip or a wiggle:  Many buyers of stocks forget that what they are buying is an ownership interest in an actual business, which had an underlying value.  Investors confuse a rising stock price with a healthy and vibrant business. By forgetting that stocks are actually pieces of a real business, intelligent people turned the stock market into a casino by buying what was rising and selling what was falling.  Value investors buy undervalued assets and sell them when they become overvalued.

Mr. Market is mental: Graham created a metaphor for the daily ups and downs of the stock market and named it “Mr. Market”. Mr. Market is a manic-depressive and is not a very good appraiser of businesses.  When stocks rise, Mr. Market gladly pays more than their value, and when stocks fall he will unload stocks for much less than their worth. When Graham was asked what holds most investors back from achieving success in the stock market, he said, “The primary cause of failure is that they pay too much attention to what the stock market is doing currently.” Take your eye off the stock market and keep your eye on the company.

Price is the biggest factor: Graham warned that, “Really dreadful losses always occur after the buyer forgets to ask, ‘How much?’” A great company can be a lousy investment if you pay too much for its stock.  Buying a great company is no guarantee of high returns; you need to pay the right price too.

Who are you?
Who makes money over the long term in the stock market?  There are two classes of investors in the stock market: speculators and owners.  The majority of stock investors are speculators. They base their investment decision on emotion, buy stocks that are rising and sell stocks that falling, buy dozens of stocks hoping to make a killing and pay high prices and get very little value. 

Owners make up a tiny minority of investors.  They base their decisions on logic and rational, pay bargain prices for quality companies, buy as prices fall and sell when prices rise and hold a concentrated group of stocks that, like fine wine, get better over time. 
Which class do you think creates long term wealth?  Owners, far and away are the investors that see their brokerage accounts go up over time.

What Has Worked In Investing
A study was done by an old line investment firm on what has worked in investing.  They did 44 studies over several decades of data and came to one conclusion: value stocks provided the best returns over long periods of time.  Over the past forty years value stocks have outperformed growth stocks by almost double!

When we came out with the first issue of Hidden Values Alert in February 2005, I would not have believed that some of my first picks would rise so quickly.  Value investors measure their time frames in years not months, even so, the results have been impressive:

• Daktronics — rocketed 188% (selected Feb. 2005)
• Factset — soared 82% (selected Apr. 2005)
• Medical Action — jumped 72% (selected Dec. 2005)
• Cadmus Communications — rose 70% (selected May 2005)

Come and join me and stop buying stocks like your lottery tickets, hoping to make a big score.  Become a subscriber to Hidden Values Alert and start using the stock market to build wealth.  Start thinking like a value investor and increase your account with less stress.  Your journey to becoming a value investor begins today...with a subscription to Hidden Value Alert.

Charles Mizrahi, editor