Value+Investing

__**Value Investing**__

Hyeji & Chloe ​Improved by Jason Lim and Ryan Chen

//Value Investing:// Value investing is a set of principles that was introduced by Graham through his Security Analysis in 1934. In general, value investing emphasizes in buying stocks that are low-in-favor in the market, due to investors irrationality for that stock.

Belief: Value investors believe that the market reacts to both positive and negative news, resulting in stock movements that do not correspond with the company's fundamentals. This consequently provides an opportunity for the value investors to gain profit by buying when share price is low.

Controversies: To determine intrinsic values as there is no universally accepted way to estimate them. For instance: Two investors can be given the exact same information and place a different value on a company. Because of this, another important concept about value investing is "margin of safety", which means that you buy buy at a big enough discount to allow some room for error in your estimation of value. In other words, when market price is significantly below your estimation of the intrinsic value, the difference is the margin of safety. Also, the very definition of value investing is subjective. Some value investors only focus on present earnings, not on future growth. Others base strategies completely around the estimation of future growth. Although there are differences in the value investors' methodologies, they all share the same goal of trying to buy shares less than their worth.

Benefits: Approach the stock valuation from a business owner’s perspective. Can establish that the market has irrationally beaten down the stock’s price, and the price bears no relation to the stock’s actual worth or net asset value. Determine the stock’s intrinsic value. Determine the margin of safety.

//Video:// media type="youtube" key="YpCeUBS37DU?hl=en_US" height="315" width="420"

Keynote



//Questions:// 1. Value Investing is basically a set of tenets introduced by //_.// //2.// The difference between the intrinsic value of a stock and its market price is __. 3. There is a correct and universal way of estimating the intrinsic values of stocks. True/False?

//Citations:// http://www.investopedia.com/terms/v/valueinvesting.asp http://www.grahaminvestor.com/articles/value-investing/what-is-value-investing/ http://www.eurosharelab.com/what-is-value-investing http://en.wikipedia.org/wiki/Value_investing www.youtube.com/watch?v=YpCeUBS37DU