Among the various types of investing methods let us first see value Investing. First of all what is value Investing.? Simply saying buying the Stocks at very low price and selling at Considerable higher price is called value Investing.
In another words Stocks purchased at lower than the ( Intrinsic value ) Real value. If the market value is very lower than the Intrinsic value , the chances of stock prices further more lowering are less. Let us see with an example,
For example if Onion is cultivated in your own Garden then the actual cost price is Rs.10 / Kg. During season times we can get the same onion for Rs.6 / Kg. So apart from production rate Rs.4 / - is the gain per / Kg. If we are able to get onion at a cheaper cost, less than the real value, then
1. In houses we can purchase required for 1 to 3 months.
2. In hotels for Ambulate, Onion dosa etc…..
For example if you have planned to open a Xerox, with cell phone sales and some Stationery items, shop at a cost of Rs. 2 /- Lakhs. Supposing the same kind of shop with complete required facilities what you expect, is available in Rs. 1.5 /- lakhs. What you may do ? You may definitely purchase the shop ! It is called value investing.
Even stocks, at some times may be available less than the real value. How to pick at those stocks ? For value stocks P / E, P / BV, and several other factors will be low. Dividend yield will be more. In those companies the growth speed , will be low. Like a Tortoise more as slow and steady. Rapid growth expecting investors don’t like these type of stocks.
This pattern of investing was said to the world by Benjamin Graham and David Dodd, the two experts who worked as Professors in Columbia business school, America in the starting of 20th century. Later they wrote a book “Security Analysis” in 1934, a most popular book of the stock market.
At present age, value investor is Warren Buffet, the disciple of Benjamin Graham. John Templeton, Joel Greenblatt, also were best in value investing. The book of value investing named “The Intelligent Investor” written by Benjamin Graham attained world fame.
In English “Intrinsic value” a term will be used. It means a products real value. From our above example the real value of onion is Rs.10/-Kg. But we are able to get at Rs.6/-Kg from the market. i.e. at a discount of 40 % lesser than its real value. If purchased lower than the real value, chances for further reduction, are very less or sometimes Nil.
Not that alone, value companies
1. Income
2. Expenses
3. Gain or Profits will be steady.
In future growth prospects can be calculated easily. Since the activities being steady, investment risk is very low. But generally rapid growth expecting companies future cannot be predicted, moreover the risk will be high.
How to find out the value stocks ?
The first point to be noted is any stock must not be purchased at more value. Generally in each period a sector / economy will flourish. During that time that sector / economy stocks price will be rising to its peak. Value investors not even face that direction. Moreover they won’t buy any stock. They start selling.
When the market is at its peak, they won’t buy any stock. In turn, they start selling their stocks. When the entire market being down, value investors tongue may get wet like the waterhole. They wont stop and try to swallow. Stocks bought will be more. Value factors ( such as P/E, P/BV, Dividend etc…. ) whether, are being attractive will be investigated ! What is the margin of safety will be calculated. ( In the above onion example Rs.4/- ( 10 – 6 ) ) Companies cash flow, how stable they are would be monitored. Those companies selling products have overall brand value, when compared to opponents, strength, monetary strength, several things would be analyzed.
Value investing if told shortly, as explained in the book “ The Intelligent Investor”, stocks may not be purchased like perfumes ( scents) instead they can be purchased as provision items. Our people are experts in buying provision items, but they are not applying in buying stocks.
The characters required for value investing :-
1. Patience.
2. Self control.
3. Ordinary intelligence.
4. Investment discipline.
In executing any actions, in the beginning itself, nobody can make a success. Stock investing also not left apart from this. The investors, I have heard playing irrationally following no specific rules and in the end murmur as “Gambling’. Further they also lament as Luck was not bestowed to them, and never enter the direction of stock market. In spite of this, the mistakes committed previously can be recalled, ascertained and a new investment strategy can be handled, and a successful investment experience, can be attempted. In today’s period the Giants of the stock market also, faced many tremendous losses and finally reached the throne. Failures made them success, but not flaggy.
Value stocks are stocks that are priced lower than the value of the company and its assets. You can identify a value stock by analyzing the company’s fundamentals and looking at some key financial ratios, such as the price-to-earnings ratio. If the stock’s price is lower than the company’s fundamentals indicate it should be (in other words, it’s undervalued), then it’s a good buy — a bargain — and the stock is considered a great value.
In another words Stocks purchased at lower than the ( Intrinsic value ) Real value. If the market value is very lower than the Intrinsic value , the chances of stock prices further more lowering are less. Let us see with an example,
For example if Onion is cultivated in your own Garden then the actual cost price is Rs.10 / Kg. During season times we can get the same onion for Rs.6 / Kg. So apart from production rate Rs.4 / - is the gain per / Kg. If we are able to get onion at a cheaper cost, less than the real value, then
1. In houses we can purchase required for 1 to 3 months.
2. In hotels for Ambulate, Onion dosa etc…..
For example if you have planned to open a Xerox, with cell phone sales and some Stationery items, shop at a cost of Rs. 2 /- Lakhs. Supposing the same kind of shop with complete required facilities what you expect, is available in Rs. 1.5 /- lakhs. What you may do ? You may definitely purchase the shop ! It is called value investing.
Even stocks, at some times may be available less than the real value. How to pick at those stocks ? For value stocks P / E, P / BV, and several other factors will be low. Dividend yield will be more. In those companies the growth speed , will be low. Like a Tortoise more as slow and steady. Rapid growth expecting investors don’t like these type of stocks.
This pattern of investing was said to the world by Benjamin Graham and David Dodd, the two experts who worked as Professors in Columbia business school, America in the starting of 20th century. Later they wrote a book “Security Analysis” in 1934, a most popular book of the stock market.
At present age, value investor is Warren Buffet, the disciple of Benjamin Graham. John Templeton, Joel Greenblatt, also were best in value investing. The book of value investing named “The Intelligent Investor” written by Benjamin Graham attained world fame.
In English “Intrinsic value” a term will be used. It means a products real value. From our above example the real value of onion is Rs.10/-Kg. But we are able to get at Rs.6/-Kg from the market. i.e. at a discount of 40 % lesser than its real value. If purchased lower than the real value, chances for further reduction, are very less or sometimes Nil.
Not that alone, value companies
1. Income
2. Expenses
3. Gain or Profits will be steady.
In future growth prospects can be calculated easily. Since the activities being steady, investment risk is very low. But generally rapid growth expecting companies future cannot be predicted, moreover the risk will be high.
How to find out the value stocks ?
The first point to be noted is any stock must not be purchased at more value. Generally in each period a sector / economy will flourish. During that time that sector / economy stocks price will be rising to its peak. Value investors not even face that direction. Moreover they won’t buy any stock. They start selling.
When the market is at its peak, they won’t buy any stock. In turn, they start selling their stocks. When the entire market being down, value investors tongue may get wet like the waterhole. They wont stop and try to swallow. Stocks bought will be more. Value factors ( such as P/E, P/BV, Dividend etc…. ) whether, are being attractive will be investigated ! What is the margin of safety will be calculated. ( In the above onion example Rs.4/- ( 10 – 6 ) ) Companies cash flow, how stable they are would be monitored. Those companies selling products have overall brand value, when compared to opponents, strength, monetary strength, several things would be analyzed.
Value investing if told shortly, as explained in the book “ The Intelligent Investor”, stocks may not be purchased like perfumes ( scents) instead they can be purchased as provision items. Our people are experts in buying provision items, but they are not applying in buying stocks.
The characters required for value investing :-
1. Patience.
2. Self control.
3. Ordinary intelligence.
4. Investment discipline.
In executing any actions, in the beginning itself, nobody can make a success. Stock investing also not left apart from this. The investors, I have heard playing irrationally following no specific rules and in the end murmur as “Gambling’. Further they also lament as Luck was not bestowed to them, and never enter the direction of stock market. In spite of this, the mistakes committed previously can be recalled, ascertained and a new investment strategy can be handled, and a successful investment experience, can be attempted. In today’s period the Giants of the stock market also, faced many tremendous losses and finally reached the throne. Failures made them success, but not flaggy.
Value stocks are stocks that are priced lower than the value of the company and its assets. You can identify a value stock by analyzing the company’s fundamentals and looking at some key financial ratios, such as the price-to-earnings ratio. If the stock’s price is lower than the company’s fundamentals indicate it should be (in other words, it’s undervalued), then it’s a good buy — a bargain — and the stock is considered a great value.
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