Principle #2: Intrinsic Value (Lesson 7)
Intrinsic value is just one of the four principles of value investing. Intrinsic value assists with setting the floor price for a security.
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Lessons, Tutorials, Resources
This site’s primary purpose is to educate readers about value investing. This section provides over 100 lessons along with valuable resources and tutorials to assist the reader with understanding the principles of value investing.
Principle #1: Risk Reduction (Lesson 6)
With value investing, steps are taken to dramatically reduce potential financial losses. Risk reduction is directly associated with financial loss.
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Primary Tenet of Business (Lesson 5)
With the stock market, buying low and selling high is the goal for any investor. Making a profit is the primary tenet of business.
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Holistic Approach (Lesson 4)
Value investors utilize all the respective underlying elements of business; they utilize an holistic approach.
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Market Fluctuations (Lesson 3)
There is a hierarchy of forces that drive stock market fluctuations. Economic wide forces have the greatest impact overall.
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Risk Aversion (Lesson 2)
Value investing requires risk aversion and at the same time volatility with the market in order to have opportunities to buy low and sell high.
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Reasonable Expectations (Lesson 1)
Value investing is superior to other investment models over long journeys of time. Reasonable expectations are required to be a successful value investor.
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Economic Uncertainty (Lesson 23)
If you think of the economy as a train pulling a load on the track, you would base its near future position on its current and historical trend. It is unlikely its current speed will change; thus, we can predict its future position with some degree of confidence.
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High Price to Book Ratios – Proper Interpretation and Evaluation
With stock investing, one of the valuation ratios used is the price to book ratio. It identifies the spread between book value and market value for a share of stock.
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Valuation Ratios
Valuation ratios are the only group of business ratios that are externally and not internally driven. The market dictates valuation ratios.