By investing a predetermined amount at regular intervals, you buy more shares when prices are low and fewer when prices are high. Over time, your average cost per share may be lower than the average share price. An investor may want to reconsider his or her financial ability to continue making additional investments through periods of low share price levels as dollar cost averaging does not insure a profit and does not protect against loss in declining markets. Investors can choose reinvestment of their dividends and capital gains distributions to realize the benefit of compounding, which can greatly enhance long-term returns. Your original investment grows when the dividends and capital gains distributions are added to it.
Value investors are bargain hunters.
We look for companies whose prices are low given their previous performance, earnings, dividends, or value of its assets. A company may be in the down phase of their business cycle, but we believe they can turn things around. Our risk is that a company may stay in its slump. Since we buy stocks at low prices, there is less risk that it will go further down and a better probability that it will go up. In order to help you feel more comfortable with the investment process, we have provided the following glossary to help you remember the definitions of some of the more common mutual fund terms.