Market theory states that investors in shares get paid for risking their money. The greater the risk we take, the larger the payment. Therefore, in the grand scheme of things, risk equates to profit. Like all theories, this is bound by a number of basic principles that when examined open up a lot of room for other opportunities.

Value investing is far from risky. Many would see it as the most boring way possible to invest your money and very risk averse indeed. Even so, over the years value investing has been a very remunerative theme to employ in the market.

While the underlying system has changed a bit over time, value investing still remains the art of picking cheap stocks. In the early days it was as simple as picking low P/E, high yield, asset-rich companies, then sitting back until they finally rallied, but such obvious picks have become rarer. However, they have not disappeared altogether.

It makes perfect sense that risk equates to reward when you consider the motivation of investing. The more likely you are to get your fingers burned on a deal, the more payout you want. The gamble pays off if disaster doesnt strike. The law of supply and demand does the rest and the result is the more dangerous a set of risks, the more payout you will receive.

This is one of reasons you have a portfolio; spreading risk over different investments enables winning and losing investments to average out painlessly. By spreading the risk, you can benefit from the reward.

Yet reward comes in many forms and people are often paid in kind. For many, payment comes in the form of pleasure: the glamour and excitement of an investment. If you're thrilled by a stock because it has a great brand or has an enthralling story to tell, you will pay through the nose for it. It is not surprising then that glamour stocks will return less profit than dull companies you are paying a premium for them.

It has long been known that investing in value stocks brings a solid return above the index. Discovered by Benjamin Graham in the 1950s and perfected by his student Warren Buffett, value stocks are a great way to get rich slowly by investing cautiously over the long term. Sadly the get rich slow element doesnt suit many. Investors are natural bulls and are driven by optimism. More often than not, people go hunting for massive returns instead of a little out performance. Consequently, most end up getting poor quick rather than rich slow. Value stocks are ignored as boring, but research highlights that boring is profitable. Boring stocks and value stocks are overwhelmingly the same thing.

There are many investment tacks. Momentum investing was the toast of the late 1990s. The idea was to jump on a fast moving stock and ride with it. Clearly a momentum stock was going up, so jump on the trend. The extreme form of this was the greater fool idea, where a momentum investor simply had to find someone more stupid than himself to sell his stock to, to make a profit. However, much to their surprise, momentum investors never did find a greater fool.

Momentum investing is very tempting. There is often a new craze in the market that sees a type of stock rocket. It is hard to control the greed impulse that would sweep you up in the herd euphoria. The key thing to remember is: its nearly impossible to time the market and to pick the top or bottom of a fast moving market. This is one of the flaws to momentum investing. Another is the investor really doesnt know why hes investing at all, except that everyone else is. Its all rather lazy and while we can expect to be paid to risk our money, the wages of laziness are notoriously poor.

Most people indulge in random investing, which as a matter of fact can be quite close to the buy and hold model. Buy and hold tends to suggest you cant outperform the market, and so as long as you hold a broad basket of stocks, you may as well sit back and go along for the ride. This is certainly a low stress way of doing things so long as you spread your risks around, but then again what an active investor is trying to do, is do better.

Value investing comes down to investing in boring companies. If we pay a premium for exciting, glamorous stocks, we will pay a discount for unfashionable companies. Of course, its hard to measure boring, but we can track down these stocks online in two ways. Uniquely, on the Internet, you can access a wealth of data on companies and use powerful tools to sift through mountains of data. Boring companies have low P/E ratios, high dividends, a large multiple of sales to market cap and generally have had falling stock prices for long periods. The chart of a boring company will look comatose and have a stagnant price. This is the classic M/O of a value stock.

The classic chart of a value stock looks like a ski slope. You will see that the long-term price of a classic value stock has shot down a steep piste and is now bobbing along the nursery slope going nowhere in particular, except maybe slightly down.

While similar companies in the same sector doing the same job will enjoy higher P/Es and have lower multiple of sales to market cap, there will be no apparent reason why the cheap company is valued at a significantly lower rating from its more fashionable competitors. Spending a few hours on the Internet will establish if there is anything very wrong with the company and most times there will not be. The business is just neglected.

You will find that value investment companies with this kind of form do obscure, unexciting things like make sausage skins or electric cables or lorry doors or obscure widgets. Theyve probably had some bad news some years ago, or have such a generally cautious attitude to business that puts investors off. But the real story will be in the balance sheet piles of assets, cash building up in the bank that cant be hidden, big ratio of sales to market cap. These are all signs a company is on the cheap.

In the end, the low stock price of a solid business will often spark back into life. Many such companies simply get taken over by private equity asset strippers, who pay a tidy premium to get their hands on cheap assets. If you sift back through the last years, you will see dozens of companies with the above features, which have been bought up.

Another way to find value investments is to search the investment message boards, such as those at www.advfn.com. Dont look for a fantastically busy topic, look for small factual references to companies that fit the bill, which you can do your own follow up research on. If no ones talking too much about a stock, its worth looking into, as when the searchlight of Internet interest is turned on it, the price is almost bound to move.

Yet the most important thing is to do your own research into companies you plan to invest in. Whatever tack you take in investing, one piece of your own research is worth 10 tips.

The key to value investments is finding solid businesses at a low valuation. There are 20,000 stocks listed on the US exchanges, far too many to get much coverage in the media or from analysts. This gives the private investor the opportunity to go prospecting.

Clem Chambers is CEO of ADVFN, the leading stocks and shares website. For real-time stock prices go to: www.advfn.com