Traditional value investment strategies are gradually losing effectiveness. Investors expecting the market to recognize the 'true value' of stocks, crypto, or any asset may be stuck in an outdated game.
Let's examine the changes and how to adapt to optimize your investment strategy.
1️⃣ Value Trading: A Strategy No Longer Effective
In the past, value investors often:
Buy cheap stocks (low P/E, about 10 times earnings).
Wait for the market to reprice, then sell when the P/E rises to 15-20 times earnings.
But today, the market has changed:
ETFs and passive investing: ETF funds overshadow individual valuation opportunities.
Polarization effect: Cheap stocks get cheaper, expensive stocks get more expensive.
According to David Einhorn—veteran investor, market expectation-based strategies are no longer reliable.
2️⃣ Pure Value Investment: Direct Profit Taking
Instead of waiting for the market to correct, Einhorn shifted to pure value investing:
Choose low-priced stocks: Businesses with a P/E of about 4 times earnings, with high free cash flow.
Look for businesses sharing value: Companies that pay dividends or buy back shares to create immediate value for shareholders.
For example:
Einhorn does not wait for stock prices to rise but looks for companies that buy back shares, reducing supply and increasing value for holders.
Results:
Year 2022: Profit 36.6%.
Year 2023: Profit 22.1%.
This is clear evidence that pure value investment strategies can work effectively in the new context.
3️⃣ Lessons for Crypto: Value Investment in the Token Market
The crypto market is also undergoing a similar change.
In the past: Buy Bitcoin, switch to altcoins or memecoins and wait for the next price surge.
Currently: Old strategies are no longer effective. Token prices often drop sharply, and expecting a short-term recovery is increasingly unpredictable.
So what is value investing in crypto?
1. Pure Value Investment
Look for projects that generate actual revenue.
Revenue-sharing projects through:
Token dividends: Distributing profits to holders.
Buy back and burn tokens: Increase value for the remaining tokens.
2. Value Trading
Buy low-priced tokens and expect prices to rise due to market sentiment.
Dependent on excitement and speculative cash flow, similar to value trading in stocks.
4️⃣ Which Strategy is More Effective?
Value trading: Effective in a strongly rising market when FOMO spreads.
Pure value investing: More sustainable, especially in declining or stable market phases.
Ask yourself:
Do you want to invest for short-term profit, or do you want to build long-term value?
Conclusion: What Game Are You Playing?
The investment world has changed, from traditional stocks to crypto.
If you still rely on old strategies – waiting for the market to 'see the value' – you may be disappointed. Instead, focus on projects or businesses that create direct value for investors.
Whether you invest in stocks or crypto, the right strategy not only helps you adapt but also helps you win in a constantly changing market.
🎯 Understand clearly the game you are playing – and always stay ahead of the crowd! 🚀
