| Value investing - Concepts |
This term was coined and gained prominence during Benjamin Graham’s times. He was the thought behind the concept of value and investing. Unlike the earlier accepted theories of investing in the stock market wherein the stocks were considered to be slightly risky instruments and no one actually talked much about the Business Engine which is inherent to the stock itself.
Value investing looks at the person, employing the money in a stock, as investing an amount and thereby acquiring the status of a partner in business.
It looks at the inherent Business value of a Company over a period of time. The value investor is not baffled by the short sighted ness of the markets in panic times and is well aware that one day the company will be valued as per its actual worth
Value investing talk’s about the parameters for evaluating a Company and its Business. It does not give much heed to market’s daily fluctuations.
There is also a mention of time value of money and how it should be used while arriving at the Company’s future earnings and discounting the same.
It’s like buying the near by store with the amount that the investor has. He asks himself questions like is this a viable business in the long run? Does the Business product pipeline seem great? Will I be assuming a large debt? When the answer to all these questions is right then the individual decides to go in for the kill. Trying to understand business is a tricky part and needs some keen insights about the sector and the nature of Business.
With this we come to an end of this article on value investing.
Pramod Shet is an Expert Investment author and a successful trader.
http://www.articlelegend.com/onlinestocktrading/
Copyright 2008 Pramod Shet.
Article Source: UnArchived Articles
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