馃 VALUE INVESTING IN A NUTSHELL
Core Principles:
1. Intrinsic Value
Every company has an estimated real worth based on its assets, earnings, and future potential, which may differ from its market price.
2. Market Inefficiency
Market is not always efficient and that stock prices can be driven by emotions like fear and greed, causing them to be temporarily mispriced.
3. Margin of Safety
Buy a stock at a significant discount to its estimated intrinsic value. This discount acts as a cushion against potential errors in calculation or market downturns, reducing risk.
4. Fundamental Analysis
Perform in-depth analysis of a company鈥檚 financial statements (balance sheet, income statement, cash flow statement) and business model to determine its health and intrinsic value.
5. Patience and Long-Term Horizon
Value investing is a long-term strategy. Investors patiently hold their positions, waiting for the market price to eventually reflect the underlying value of the business.
6. Contrarian Thinking
Value investors often go against the herd, buying when others are selling due to negative sentiment and selling when others are buying during periods of euphoria.
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