Will You Buy Car @50% Discount Even If You Don’t Need It & Sell At Way Higher Price Than Your Purchase Price If You Don’t Keep It
- Value Investing Works On The Same Concept Of Above Mentioned Example.
- You Pay Lot Less For Phenomenal Stock When It’s On Sale In Market.
- Now You Have Bought Stock At Low Price, You Make Profit By Selling It When It Reaches Its True Value.
- To Check Undervalued Stock
Check Ratios Of Lower Than Average Price To Book Value, A Low PE Ratio Results In High Dividend Yields. - “It Is Much Better To Buy A Wonderful Company At A Fair Price Than A Fair Company At A Wonderful Price.” -Benjamin Graham
- Coming Up With Fundamentals Of Value Investing
- Look For True or Intrinsic Value
Find A Concrete Number By Different Valuation Models Like
Dividend Discount Model
Discounted Cash Flow Model
Comparable Companies Prices - Avoid Following The Herd
“Be Greedy When Others Are Fearful And Be Fearful When The Others Are Greedy.” -Warren Buffett
For Value Investing Avoid Following The Herd Don’t Buy Stocks Just Because Everyone Is Buying.
- Always Have A Margin Of Safety
Its A Guiding Philosophy In Value Investing To Give Yourself Benefit Of Doubt By Keeping Margin Of Safety. - If You Calculate True Value As 1000, Buying Stock Anything Below That Is Undervalued, If You Keep Margin Of Safety As 30% So You Will Buy Stock At Anything Below Or Equal To 700.
