This article was originally published last August. It has been updated.

A subpar year in 2004 is now jogging memories of the critical importance of wealth preservation. But here's a radical thought: With the threat of terror and multidip recessions, one of the finest ways to preserve your capital over the long term is to keep investing it into stocks. Yes, stocks.

Value stocks, that is.

For an explanation of why, let's travel back to 1984 when Berkshire Hathaway Chairman Warren Buffett gave his classic speech at Columbia University titled "The Superinvestors of Graham-and-Doddsville." In it, he extolled the virtues of Benjamin Graham's value approach to investing and was unyielding and clear: You can beat the market.

To prove his point, he cited the work of the four young employees at Mr. Graham's firm in the mid-1950s. Over the ensuing decades, using his teachings, they'd gone on to thrash the market's average return, through bear and bull markets. They'd done the equivalent of purchasing unclaimed diamonds at wholesale, then selling them three times higher at retail.

The result of it all to this day has been a delivery to their shareholders of untold millions of dollars. Consider, for example, that Donald and Mildred Othmer invested $50,000 with Warren Buffett in the 1960s and watched it grow into a $750 million estate over the next 30 years. Those rewards were driven by a curious and creative mind applying the basic precepts of value investing.

What makes for a great value play?
Aspiring to add to this great tradition, in August 2004 The Motley Fool launched Inside Value, our newsletter and online advisory network for value investors. The service features independent and cooperative research on some of the most unloved yet undervalued stocks in the world. These are special-situation stocks, the sort that brokers gruffly dismiss as "dead money." They're the stocks of companies emerging from bankruptcy, or transitioning into new management, or showcasing a tattered reputation, or -- in the dream scenario -- all of the above.

You can take a free 30-day trial with no obligation to subscribe to what I promise is a truly wonderful service.

Our expert team, led by master value analyst Philip Durell, scours the markets for promising companies priced with a margin of safety for investors. Indeed, our team of analysts has one simple goal: to patiently exploit that distance between a company's intrinsic value and its stock price for the benefit of our members.

For examples of this, think back to Tyco (NYSE:TYC) in the winter of 2002, when news of senior executives looting the company dropped the stock to $11 per share. It now trades at $35. Think of Altria (formerly Philip Morris) (NYSE:MO) in April 2003 when investors sold the stock down below $30 on fears of tobacco litigation. It's in the low $60s now.

We've all seen what's happened to MCI Inc. (NASDAQ:MCIP) since it emerged from bankruptcy with new management and a clean balance sheet, yet completely unloved. In a few months it's jumped from $12.50 per share to over $19. Or how about MBNA (NYSE:KRB), the outstanding credit card company that traded at $12 per share in early 2003? Today, its shares trade hands at $27. And then there's defense contractor General Dynamics (NYSE:GD). In early 2003, it was down to $50 for no apparent reason, despite the fact that the U.S. was about to go to war with Iraq. It's now doubled at over $100.

The great value plays emerge just when everyone stops caring or believes the cause is lost, when the brand name is tarnished, management gets booted, the stock trades to new lows, and the enterprise is left for dead. That's when, having done their due diligence, the great value investors tiptoe in, snap up shares, sit back, and wait for something good to happen. It's precisely what Warren Buffett did back in the late 1970s, buying up GEICO beginning at $2 per share when many thought the firm would collapse. GEICO was the quintessential value play, with a wide margin of safety. It stands as arguably the finest investment in Warren Buffett's masterful career. Its greatness was apparent only to deep value investors.

Leading the march for value
As I said, leading our team is all-star analyst Philip Durell (a.k.a. TMFAdmiral from The Motley Fool community). Philip was the winner of last year's Feste Award, given to the most valued contributor to The Motley Fool as voted by our tens of thousands of community members.

Prior to the launch of Inside Value, he was writing for and shining as a top assistant in my own newsletter, Hidden Gems, breaking down the financial statements and contributing sophisticated valuation work on promising value investments such as Fresh Del Monte (NYSE:FDP) and Alderwoods (NASDAQ:AWGI). Along with Philip, I think both of these Hidden Gems will double from here over the next three to four years; I highly recommend them to you.

In each issue of Inside Value, you'll find thorough research, sound logic, and a pair of very compelling stocks. Some of the latest picks include a boring company that simply makes doors. Since being recommended three months ago, it has appreciated 35% on the news that it has agreed to be taken over. A second-quarter earnings hiccup has one provider of pharmaceutical management services trading a full 40% off its 52-week highs. And yet, earnings are expected to increase by 20% or more for full-year 2004. This from a company that already controls a 37% share of its market. Rarely does growth like this go on sale! These are companies everybody loves to hate, but they're being offered at prices right now that value investors can come to love.

You can see all of Philip's recommendations by taking a free trial of Inside Value. And I want this to be very clear. You can view the recommendations, enjoy the service, then cancel within 30 days without paying us a penny.

Inside Value's unending goal is to find unfairly maligned companies and stocks at prices that can help you beat the market handily. I've been extremely proud to work with Philip in Hidden Gems, and he brings all his energy, enthusiasm, and exquisite analytical abilities to bear in every issue of Inside Value.

Plumbing the depths for profit
I don't want to make value investing seem simple. It isn't. It demands curiosity and a strict adherence to the principles of valuation. However, if market-beating value investing sounds impossible to you, that's not the case either. Great firms such as Tweedy Browne, the Royce Funds, Baupost Capital, the Weitz Funds, and the Clipper Fund have been practicing it successfully for many, many years.

They have succeeded because our stock market is still crowded with Wall Street brokers scalping commissions, mutual fund managers focused on their fees, and individual investors obsessed with daily stock price movements. Their short-term passions create plenty of undervalued stocks for those of us willing to become long-term owners.

The value investing philosophy can best be contrasted with investments in early-stage, rapid-growth companies. Picture venture capitalists searching universities and major urban areas for bright entrepreneurs with everything on their side: youth, enthusiasm, an innovative spirit, and the tendency to dream.

Some of the venture capitalists that funded the personal computer, semiconductor, wireless, and biotechnology industries at their outset did extremely well. But early investors in companies such as Microsoft or Intel, IBM or Apple, Cisco or AMD, or even visionaries such as my brother David, who invested in AOL and eBay, can hardly be called value investors. They fixated their eyes heavenward on the sun, moon, and stars and took their chances on a diverse collection of rockets.

The opposite of these stargazing astronomers of commerce are the marine captains and deep-sea divers of value investing. They plumb the undiscovered depths for fallen treasure in dark and troubled waters. The greatest value investments are not out sunning in full view on the beach, not floating in a red balloon overhead, not soaring to the moon. They're buried deep in the slime and muck, under seaweed and rocks, out of view.

They're old-line manufacturing firms when the market is in love with and paying too much for technology stocks. They're Internet turnarounds with loads of cash on the balance sheet just when everyone finally agrees Internet stocks are a disaster. They're scandal-ridden, out-of-favor, disregarded, or recently disgraced companies with the potential to turn around in stunning fashion.

In Inside Value, Philip Durell is your deep sea captain (incidentally, he has served as a master mariner in the Merchant Marine). He's your turnaround specialist (having spent much of his professional career turning around companies as a senior executive). He is your guide to finding those great companies out there -- no matter where they are -- poised to outperform but available sometimes for pennies on the dollar.

Isn't it time you stopped running with the pack, buying into companies that you may not understand simply because they're going up... only to watch them crash down below your purchase price because you had no margin of safety?

I guarantee you Philip will offer you a different way to invest. Not only will he hand you great selections from month to month, but also he'll give you an education in investing that's unparalleled. He's already overseeing a burgeoning community of engaged, bright investors ready to discuss each recommendation and answer your investment questions.

Save your portfolio from the market forces huffing and puffing at your door. Inside Value offers you the bricks and mortar to secure your investing strategy and help you beat the market.

Take a free, no-risk trial to Inside Value today and become part of something special: the leading interactive network for long-term value investors.

Foolish best,

Tom Gardner

Tom Gardner is co-founder of The Motley Fool. Of the companies mentioned in this article, he owns Cisco and Microsoft. As always, The Motley Fool is investors working for other investors.