History shows that the stock market has been, and can be beat, by brave folks willing to buck the momentum herd and focus on fundamentals. The roster of those who are capable of delivering and sustaining market-beating investing results includes legends like Warren Buffett, Benjamin Graham, Peter Lynch, and Bill Miller. Time and time again, the folks who can beat index trackers like the iShares S&P 500 Index
My friend and colleague Philip Durell has studied these masters, their strategies, and their successes. As the lead analyst for Motley Fool Inside Value, Philip's selections have outpaced the market's return (as measured by the S&P 500) by more than three percentage points since the newsletter's inception a little over a year ago. He has done so by recommending attractively priced global stalwarts like industrial conglomerate Tyco
Why value wins
The reason Philip's selections have bested the market is simple. Like the value greats who came before him, he selects strong companies that are going through short-term tough times. Consider the saga of technology titan IBM
It sounds crazy, but such things happen all the time. Last summer, Philip dug up consulting firm Accenture
The market is an emotional roller coaster. When things are going well for a company, its stock can get priced as though the good times will last forever. When things are going poorly, the market often overreacts on the downside, pricing an otherwise solid company as though its days are clearly numbered. Some would say that such irrational panic may be hitting technology retailer RadioShack
With an objective understanding of the worth of a business, confidence that the market will eventually sort itself out, and enough patience to wait out the process, value investors have beaten the market time and time again. At Inside Value, we're confident that history will repeat itself, and value will once again prevail.
Just after the market closes this afternoon, another issue of Inside Value will be released, and two more companies will join our list of potential market-beating, value-priced investments. Take a 30-day free trial, and be among the first to discover what they'll be. With your trial, you'll also have access to everything we've ever published. You'll be able to take a look at our updated value chart for all of Inside Value's previous picks, and through back issues you can decide for yourself how much value remains in those selections. Click here to begin your free trial and start your journey toward replicating the market-thrashing success of history's greatest value investors. Should you choose to subscribe today, you'll receive a copy of Stocks 2006, the Fool's guide to the investing year ahead, absolutely free.
This article was originally published on Sept. 14, 2005. It has been updated.