The Weekly Wealth of Knowledge is your download of this week's most important topics related to financial planning, the markets, and our community. In this issue:
- The debate between growth versus value investing (2 minute read)
- June is National Safety Month - homeowner's insurance (2 minute read)
- Your guide to the outside (3 minute read)
The Growth Versus Value Debate
Looking at their recent track records doesn’t do much to settle the debate. Over the past decade, as a whole, value stocks have not performed as well as growth stocks.1 But looking at a larger body of cumulative data, reaching as far back as 1926, this has not always been the case.1 Let’s dive in a little deeper.
Investing for Value
Investors look for bargains. That is, they attempt to find stocks that are trading below the value of the companies they represent. If they consider a stock to be underpriced, it’s an opportunity to buy. If they consider it overpriced, it’s an opportunity to sell. Once they purchase a stock, value investors seek to ride the price upward as the security returns to its “fair market” price – selling it when this price objective is reached.
Most value investors use detailed analysis to identify stocks that may be undervalued. They’ll examine the company’s balance sheet, financial statements, and cash flow statements to get a clear picture of its assets, liabilities, revenues, and expenses.
One of the key tools value investors use is financial ratios. For example, to determine a company’s book value, a value analyst would subtract the company’s liabilities from its assets. This book value can then be divided by the number of outstanding shares to determine the book-value-per-share – a ratio that would then be compared with the book-value-per-share of other companies in the same industry or to the overall market.
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Understanding Homeowners Insurance
Purchasing homeowners insurance is not only critical for protecting your home and personal property against any potential liability; if you have a mortgage, your lender will require it.
A homeowners insurance policy is a package of coverages, including:
- Dwelling: Covers damages to your house and any attached structures, including fixtures such as plumbing, electrical and HVAC systems.
- Other Structures: Pays for damage to unattached structures, including a detached garage, tool shed, fence, etc.
- Personal Property: Covers personal possessions such as appliances, furniture, electronics, clothes, etc.
- Loss of Use: Reimburses for additional living expenses while you are unable to live in your home.
- Personal Liability: Pays claims if you are found liable for injuries or damages to another party.
- Medical Payments: Pays the medical bills incurred by people who are hurt on your property or by your pets.
Remember, these coverages pertain only to losses caused by a peril covered by your policy. For instance, if your policy doesn’t cover earthquake damage, then losses will not be reimbursed.
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During these times, it is very easy to fall into a routine, some of them, not good ones. Many of us are working from home even longer hours than when we are in the office, why not, when your laptop or other device is sitting there on your counter staring at you. But there are other options...getting outside and into the fresh air is one thing that has not been cancelled. It is good for your overall health, stress and can make memories at the same time that will last for years. Follow this link for 9 Connecticut outdoor adventures you will not want to miss. Don't reside in CT, we have you covered. This link will allow you to search all of the unique outdoor excursions in your home state...we will see you out there!