Today’s Take: Your investing approach should be simple.

Will Rogers was one of America’s great humorists and newspaper columnists in the 1920s.

His approach to investing in stocks was: “Don’t gamble! Take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.”

It’s an approach all right, but it’s not a reasonable one.

In fact, I bet dollars to donuts that most investors don’t have an approach at all. If they do, it’s as nonsensical as Rogers’ quote.

And if you don’t have a simple investing approach that you can sum up in a sentence or two, you’re at a big disadvantage.

So today, I want to give you insight into my approach and why it makes sense…

1 Question You Need to Ask Yourself

Before you make any investment, the first question you need to ask is: “How much is it worth?”

If not, how would you know if the price you are paying is too high or too low?

Let me sum it up in one chart…

price value and time chart

The orange line reflects the worth and growth of a business. The fundamentals of a good business trend higher over time.

And the black line reflects the stock price. Stock prices move above and below the underlying worth of the business.

When investors are euphoric, they drive stock prices way above the orange line. When they get depressed or panic, they plunge stock prices way below the orange line.

The secret to making money in the stock market is this…

When the stock price trades below the value of the business, it’s time to buy the stock. And when the stock price trades above the value of the business, you should look to sell.

It’s that simple, and it’s the best way to make profits.

And that’s why I say if you can’t figure out the underlying worth of the business (the orange line), don’t invest.

You’re like a one-legged man in an ass-kicking contest … you’re at a big disadvantage.

Our Huge Edge to Boost Our Model Portfolio

Having this approach gives my readers and I a huge edge.

By knowing what a business does and what it’s worth, we have a much better idea of what to invest in than the people who are just jumping in and out based on hype or fads.

For those of you who are already benefiting from it as Alpha Investor subscribers, congratulations! I hope to see even more gains in the months and years ahead.

And if you haven’t started using this approach yet, find out how Alpha Investor could help boost your portfolio by going right here.

Because I just released my latest monthly newsletter. In it, I share an opportunity to make potential triple-digit profits in the next few years. So, don’t miss out on taking advantage of it today.

Charles Mizrahi

Charles Mizrahi

Founder, Alpha Investor