Value investing is an approach, a style of investing. It is not a set of formulas that allows you to beat the market. Value investors, like Warren Buffett, are prudent in their approach looking for good investments at a reduced price.

Value investors believe they are buying a business. If you went into business for yourself, you would look at many options and select the one that had the best prospects at a reasonable price. No sense committing your hard earned money to something that costs too much.

How do you know you would be a good value investor? Ask yourself if any of these characteristics describe you.

I'm business oriented.

Do you like to understand how a business works? Can you describe to your better half why this company is the best one to place you money, and do you believe yourself when you explain it?

I love hunting for bargains.

Do you check out the price at several stores before making a purchase? When shopping for a hotel, do you look for what kind of deals you can get before making a reservation? If you compare the price on anything you buy, you might be value investor.

I like crunching numbers.

You like the simple math that explains the fundamentals of the business. You want to compare the numbers of the companies you like to see the ones that offer the best opportunity. This does not mean you are mathematician, just someone who recognizes that the numbers tell the story.

I prefer to factor in a margin of safety.

When you received your first credit card, you avoided carrying it for more than a year. The car you buy is rated the safest around. When you buy a stock you want to be sure it is at a low point.

I trust myself.

While analyst reports are nice and can help to identify opportunities, you prefer to make up your own mind because you know analysts can have their own agenda. You like to gain a level of comfort that whatever you buy is the best possible option out there. The same applies to the companies you consider for investment.

I don't mind going against the grain.

From experience, you find it is better not to follow the latest popular thing. Being a contrarian means you look for what is not in vogue now, but offers significant value. You know that it's unlikely the popular stocks are bargains.

I like to put together checklists.

You find yourself making lists to be sure you get all that needs to be done accomplished. Checklists make your life easier. Value investors like to follow a checklist when they review a company. While a company may not match up perfectly on each item, you go through the process to help make the best decision with the available information.

I can patiently wait for the best opportunity.

You don't mind waiting for the best opportunity to show itself. That doesn't mean you sit around watching TV, hoping a great investment falls into your lap. You are out actively looking for what you want. You just do not jump at the first potential opportunity that comes along. Value investors work hard while they wait for the right company to arrive at the right price. Once it does, they pounce. Then they are patient for the opportunity to bear fruit. However, if the market and the company proves their analysis wrong, they implement their pre-existing exit strategy and get out of the deal.

Good value investors tend to have most, if not all of these traits. If several of these characteristics fit you then you are ready to be a value investor. To take the next step toward becoming a value hunter, read more InvestingAnswers articles on the topic, including Demystifying Value Investing: Answers to Your Top 4 Questions.