Investing in Unloved Stocks Requires Vision, Patience

For some investors, stocks that are a little rough around the edges shout possibility.


Performance results validate the approach. Going back to the beginning of 1994 through the end of 2011, the unloved funds returned an annualized 8.98 percent, versus 7.42 percent for the S&P 500, Morningstar data shows.

Certainly, success with betting against the crowd is not new. Warren Buffett has famously said that a simple rule guides his stock buying: Be fearful when others are greedy, and be greedy when others are fearful.

Just be sure to jump in for a reason beyond the discount.