[/caption]
Interestingly, the internet doesn't have a good layman definition of value investing. Well, at least, not one that is easily understandable and can appeal to general people to adopt such an investment philosophy.
So we are back to basics in this post (Again!), to introduce more people to value investing. Yes a tall order given that people are wondering whether they will keep their jobs and have money to buy food next week. Much less to buy stocks!
Nevertheless, this blogger is undaunted. Here goes!
In simple layman terms,
Value investing simply means adopting an investment philosophy to buy something that's worth a dollar with a lot less, like 60c or less.
Here is a modification of the old formal definition that I posted some years back.
----------------------------------------------------------------
Value investing is a broad definition of a style of investment that follow two basic principles:
1) Buying investments that are undervalued
2) Buying investments with a margin of safety
----------------------------------------------------------------
If you think about it, this concept is so simple that it makes one wonder why investing can be made so complicated. Well, for most of the time, human emotions like greed and fear are playing tricks to blur our rational minds. And these emotions are very good (at blurring us) esp when there are prices, charts and patterns, newsflow bombarding us daily.
Over the years, the paradigm of value investing has expanded to encompass many things:
1. Fundamental analysis (FA) needs to be rigorously employed in order to determine the stock's intrinsic value. This plots value investing into the infamous FA vs TA argument. TA stands for technical analysis ie looking at charts and stuff. Read more...[caption id="attachment_1461" align="alignright" width="150" caption="Photo by -bast-"][/caption]
Interestingly, the internet doesn't have a good layman definition of value investing. Well, at least, not one that is easily understandable and can appeal to general people to adopt such an investment philosophy.
So we are back to basics in this post (Again!), to introduce more people to value investing. Yes a tall order given that people are wondering whether they will keep their jobs and have money to buy food next week. Much less to buy stocks!
Nevertheless, this blogger is undaunted. Here goes!
In simple layman terms,
Value investing simply means adopting an investment philosophy to buy something that's worth a dollar with a lot less, like 60c or less.
Here is a modification of the old formal definition that I posted some years back.
----------------------------------------------------------------
Value investing is a broad definition of a style of investment that follow two basic principles:
1) Buying investments that are undervalued
2) Buying investments with a margin of safety
----------------------------------------------------------------
If you think about it, this concept is so simple that it makes one wonder why investing can be made so complicated. Well, for most of the time, human emotions like greed and fear are playing tricks to blur our rational minds. And these emotions are very good (at blurring us) esp when there are prices, charts and patterns, newsflow bombarding us daily.
Over the years, the paradigm of value investing has expanded to encompass many things:
1. Fundamental analysis (FA) needs to be rigorously employed in order to determine the stock's intrinsic value. This plots value investing into the infamous FA vs TA argument. TA stands for technical analysis ie looking at charts and stuff. Read more...
[/caption]
Interestingly, the internet doesn't have a good layman definition of value investing. Well, at least, not one that is easily understandable and can appeal to general people to adopt such an investment philosophy.
So we are back to basics in this post (Again!), to introduce more people to value investing. Yes a tall order given that people are wondering whether they will keep their jobs and have money to buy food next week. Much less to buy stocks!
Nevertheless, this blogger is undaunted. Here goes!
In simple layman terms,
Value investing simply means adopting an investment philosophy to buy something that's worth a dollar with a lot less, like 60c or less.
Here is a modification of the old formal definition that I posted some years back.
----------------------------------------------------------------
Value investing is a broad definition of a style of investment that follow two basic principles:
1) Buying investments that are undervalued
2) Buying investments with a margin of safety
----------------------------------------------------------------
If you think about it, this concept is so simple that it makes one wonder why investing can be made so complicated. Well, for most of the time, human emotions like greed and fear are playing tricks to blur our rational minds. And these emotions are very good (at blurring us) esp when there are prices, charts and patterns, newsflow bombarding us daily.
Over the years, the paradigm of value investing has expanded to encompass many things:
1. Fundamental analysis (FA) needs to be rigorously employed in order to determine the stock's intrinsic value. This plots value investing into the infamous FA vs TA argument. TA stands for technical analysis ie looking at charts and stuff. Read more...
