I follow an approach to investing called defensive value investing.
It’s a high yield, low risk long-term strategy which is also used to manage the model portfolio.
If you’re relatively new to investing in individual companies, you might find this detailed overview of the strategy helpful.
If you’re after something a bit more advanced then the list of articles below will provide you with far more detail, in bite-sized pieces.
And if you want to know almost everything there is to know about defensive value investing, then you should probably either a) buy the book (The Defensive Value Investor) which defines the whole strategy, or b) sign up to UK Value Investor, my premium monthly newsletter.
Step 1) Find high quality, high yield, low risk companies
- How to find shares that pay a reliable dividend
- How to find reliable, profitable dividend growth
- Fast dividend growers – How to find them
- Taking account of Return on Capital Employed
- The capital cycle is something every investor should be aware of
- Lessons from a highly cyclical investment
- Measuring leverage
- The importance of a strong bank balance sheet
- Debt ratios and pension ratios: Connecting the dots between them
- Defensive shares – An unusual way to value them
Step 2) Avoid value (yield) traps
- Value traps – 18 Questions to help you avoid them
- 10 Questions every stock picker needs to ask
- Looking for companies with a durable competitive advantage
- The pros and cons of building an investment story
Step 3) Build and maintain a diverse portfolio
- How to start building a portfolio of shares
- 3 Components of a well-diversified portfolio
- How I’m increasing my focus on defensive sectors
- Why a diversified portfolio is easier to manage than a concentrated one
- How to manage a portfolio of shares
- 4 Rules for selling shares
Investment Strategy 2.0
Following some disappointing results in 2018, I decided to make a few improvements to my investment process in early 2019. Here are the related blog posts:
- Why I’ll be looking at reported earnings instead of adjusted earnings from now on
- Why I’m measuring capital employed growth instead of earnings growth
- Companies with thin profit margins often make bad investments
- Factoring in the risk of excessive corporate debt
- Investing in turnarounds, recovery stocks and corporate transformations