Well trying to distill Mr. Buffets plethora of knowledge into a few paragraphs would be impossible, but for further reading I would suggest a book entitled The Intelligent Investor
by Benjamin Graham (Warren Buffet´s mentor).
Value Investing is how Warren Buffet became the richest man in the world. Simply put he will study a business and then estimate its worth, he will then see if the market undervalues it.
The Fascinating thing is Market Capitalization (total number of shares issued x single share price = Market Capitalization) has little to do with the NAV (Net Asset Value = Assets - Liabilities)of a company and everything to do with market perception. Therefore it is possible to bag a bargain.
Sounds simple enough? Try looking at a business and valuing it yourself.............its difficult and took Mr. Buffet years to perfect.
"I´d rather be vaguely right than precisely wrong"
Warren Buffet
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