Chapter 6

Large Value: Counterintuitive Cash Cows

In This Chapter

arrow Evaluating value investing

arrow Weighing value against growth for performance and risk

arrow Recognizing ETFs that fit the value bill

arrow Knowing how much to allocate

arrow Choosing the best options for your portfolio

Why do American suburbanites gingerly cultivate their daisies, yet go nuts swinging spades or spraying poison chemicals at their dandelions? Why is a second cup of coffee in a diner free, but a second cup of tea isn’t? Some things in this world just don’t make a lot of sense. Why, for example, would slower-growing companies (the dandelions of the corporate world) historically reward investors better than faster-growing (daisy) companies? Welcome to the shoulder-shrugging world of value investing.

I’m talking about companies you’ve probably heard of, yes, but they aren’t nearly as glamorous as Google or as exciting as Cisco. I’m talking about companies that usually ply their trade in older, slow-growing industries, like insurance, ...

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