Value investing can frustrate even the most patient of stock pickers, Fool contributor Tim Beyers says in the following video.
Why? Cheap stocks tend to be unpopular in both cold and hot markets like the one we're in now. Investors can spend years waiting for Mr. Market to pay a fair price for their underappreciated holdings.
Look at ExxonMobil (NYSE:XOM). Warren Buffett's Berkshire Hathaway recently acquired more than 40 million shares of the integrated energy giant; but, at 12.7 times earnings, the stock still trades for a sharp discount to both the wider industry and the S&P 500. ExxonMobil and peer Chevron have also badly underperformed the index this year. Say what you will about the quality of ExxonMobil's business -- it's still a laggard heading into 2014.
There's no surefire strategy for avoiding such short-term losers. Your best approach, Tim says, is to buy Dividend Aristocrats. Stocks with a track record of consistently hiking dividend payments tend to outperform over the long term. Reinvesting the proceeds (a free service with most brokerages) can protect against poor performers while geometrically improving your long-term returns.
Now it's your turn to weigh in. What is your value investing strategy for 2014? What cheap stocks do you like most right now? Please watch the video to get Tim's full take, and then leave a comment to let us know where you stand.
Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Berkshire Hathaway at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.
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