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Questions tagged [value-investing]

Value investing generally involves buying securities that appear underpriced and selling securities that appear overpriced.

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Is Joel Greenblatt's Magic Formula biased towards large companies?

One of the sorting criteria in Joel Greenblatt's Magic Formula is EBIT. However, EBIT is positively correlated with the market capitalization of companies, i.e., larger companies have a higher EBIT. ...
Value_Investor's user avatar
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How do you calculate the proportion of shares required to formulate a minimum risk portfolio?

An investor has decided to invest 1 million in the shares of two companies, company E and company B. the projections of returns from the shares of the two companies along with their probabilities is ...
symon 's user avatar
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Why should I use ROIC instead of P/E given that that is the price I'm paying to buy stock?

What are the advantages of using ROIC (Return on Invested Capital) as a key financial metric for analyzing stocks compared to P/E (Price-to-Earnings ratio)? I'm particularly interested in ...
metdos's user avatar
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Is IPO price pre determined or is determined on the IPO listing date?

I was reading the book "The Intelligent Investor" with commentary by Jason Zweig, when I came across the following text in Chapter 6 (Pg 152): Perhaps no stock personifies the pipe dream of ...
CREATIVITY Unleashed's user avatar
12 votes
5 answers
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Why do we ONLY care about the future of companies like Netflix? It was very profitable in the past

I understand in a startup that has not created revenue yet, if the “future” is predicted to be bad for the company, the value of the company only would drastically go down (for the only worth was on ...
Jack 's user avatar
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As a young kid should I spend my time learning value investing or should I just chuck all my money into IVW/VOO

I have a genuine question, I am a noob at stocks. from what I have been reading value investors get higher returns than growth investors but then how come the growth etf IVW gets much higher returns ...
Linkin's user avatar
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Combining DCF and P/B

If you have two companies with the same value according to DCF, but they differ in their equity. Let's assume company A has 1M USD in equity while company B has 0M USD equity. This means that company ...
Ludvig W's user avatar
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Is the return rate equal to the discount rate if I buy a stock at its intrinsic value?

I know many value investors emphasized that we need to buy a stock with margin of safety since our estimation for intrinsic value is not precise. By this way, we can lose less when our estimation is ...
Equity_Rookie's user avatar
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348 views

Where does the formula for terminal value come from?

I am a beginner investor and I had this doubt in DCF models of valuation. Where does the formula for terminal value even come from? Like I have seen this video: https://www.youtube.com/watch?v=...
Aveer's user avatar
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Stock Analysis Equation Questions

I am a newer value investor and I am trying to slowly learn. I came across these equations and I am not able to find for sure online or in the books I have available what these abbreviations/acronyms ...
Josh E.'s user avatar
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How to evaluate an index? (other than PE based approach)

I am looking to invest in passive funds. In India there are least 5 popular indexes (Nifty 50, Nifty Next 50, Nifty MidCap 50, Nifty MidCap 100, etc.,). I am trying to find the most undervalued index ...
Kannan's user avatar
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How to calculate Graham's margin of safety?

Graham in his famous book devotes a chapter on how margin of safety is important. Can someone give examples how can we find this margin of safety?
ewr3243's user avatar
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Which version of The Intelligent Investor should I read? [closed]

There seems to be two main editions of The Intelligent Investor, a 300 page original version and 600 page version with Zweig commentary. Is the 600 page version worth the additional time? Does it have ...
JobHunter69's user avatar
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Why do we discount cash flows with WACC instead of the opportunity cost?

First, a definition of WACC: The weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted. All sources of ...
Tyler M's user avatar
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Is value investing applicable to precious metals?

Is it possible to apply value investing to precious metals? Value investing seeks to exploit discrepancies between price and value. The price of precious metals is widely known, but what about its ...
Flux's user avatar
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14 votes
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Why is there a distinction between growth and value investing, when growth is part of value?

I regularly come across articles about "growth vs value investing", "growth stocks beat value stocks", etc. Why is there a distinction between growth investing and value investing ...
Flux's user avatar
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How to calculate annualized returns given table of DCF?

I was reading the Dhandho Investor by Mohinish Pabrai, and I came acorss this table: . In context to this table the author goes in to say that for and investment of 5000$ the owner makes a 21 bagger. ...
spirit's user avatar
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What is meant by "price" and "earnings" here?

Disclaimer: I'm a finance newbie. In the context of this checklist, I want to know what the author means "price" and "earnings". I'll try to explain how I need such basic terms ...
Aaron Bell's user avatar
1 vote
1 answer
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Trading for less the value of cash and cash equivalent

What means when investors says the stock trade for less of cash and cash equivalents. Some times they say trades less than book value or assets. Can you make me an example with real stock? How this is ...
DevLeo's user avatar
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Why analysts' estimates may differ significantly from market prices and should I follow their recommendations?

Consider the following screenshot from Thomson Reuters Eikon with the freshest price targets for Sberbank (Russia's most expensive bank): As you can see, the price targets range from +12.36% to 57.31%...
kandi's user avatar
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Technical feature of the American Telephone and Telegraph (AT&T) convertible issues

In the book SECURITY ANALYSIS (Principles and Technique) 6th Edition by Benjamin Graham and David Dodd, there is a chapter (Chapter 24) about the TECHNICAL ASPECTS OF CONVERTIBLE ISSUES. Therein ...
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Negative Net income and positive Operating Cash Flow

could someone explain how come a company has an Enterprise value number higher than their Market cap, when enterprise value equals market cap + net debt? I might be stubid but I do not understand how.....
Patrizia Zaccarelli's user avatar
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What does a negative PEG ratio indicate? Is it bad or very bad?

As far as I know, if you're buying a stock with a PEG ratio less than 1, then it's a good valuation of that stock. But I don't have any idea what a negative PEG indicates. Is it bad or very bad? Here ...
Debu Shinobi's user avatar
2 votes
3 answers
308 views

Why do value investors obsess over finding intrinsic values instead of discount rates (expected returns)?

From what I read about value investing, value investors seek to buy stocks that sell below their "intrinsic value". To that end, they use stock valuation models to find the all-important &...
Flux's user avatar
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1 vote
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Are candlestick and OHLC charts useful for fundamental investors?

When investing based on fundamentals, I usually look at simple line charts to get an idea of the trading range for stocks (e.g. 1 year or 5 year trading range). I noticed that there are fancier chart ...
Flux's user avatar
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3 votes
4 answers
836 views

Why do value investors ignore technical analysis?

I have read a few articles about value investing, and a few biographies of value investors. I am under the impression that value investing does not involve chart reading or technical analysis at all. ...
Flux's user avatar
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Market Analysis Charts Using Gold as Currency (Y-Axis)? [closed]

I wish to analyze the historical value of individual assets in a wide range of asset groups; Commodities, Stocks, Bonds, Currencies, etc; in milligrams of Gold; using time as the x-axis and gold as ...
LAM's user avatar
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Now that I have all the stocks that respect Graham rules, how should I select the one I want to invest in?

As a preparation to investing, I queried a few APIs to create a list of stocks that respected Graham rules out of 100K tickers on the sales (earnings), assets to liabilities ratio and 10 years ...
Revolucion for Monica's user avatar
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Market Cap Calculation Based on Yahoo Financials

I am trying to calculate market cap based on outstanding shares and stock price for AAPL. I go to Yahoo Finance, https://finance.yahoo.com/quote/AAPL/balance-sheet?p=AAPL Quarterly view for 2019 Q4 ...
BBSysDyn's user avatar
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Why is it a bad idea to combine both active and passive investing strategies?

Common advice given is that if you decide to become an active or passive investor, you should stick with the choice you've made. That you're less likely to be successful if you try to pursue both ...
Eric Gumba's user avatar
3 votes
3 answers
83 views

How to supply and demand analysis for crude oil [closed]

Hi I'm trying to forecast the price of crude oil (WTI) and based on that either go long or short crude oil. When investing/trading stocks I normally do dcf analysises or so on the company to get the ...
Ricardo's user avatar
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3 answers
242 views

How do you make money from Growth ETF funds?

I'm doing some research as I prepare myself to start my long-term(25-30 years) investment journey. I'm taking notes covering basic terms, fund info (holdings, volatility etc) and preparing my ...
spk's user avatar
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1 answer
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Is it possible to short a stock and then buy the company for very low price?

I started investing in some years ago and I have a special skill in picking stocks which are fraudulent and will quickly drop a lot. Some examples were: CLDR which dropped from $10 to $5 overnight ...
czupe's user avatar
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2 votes
2 answers
682 views

Is "don't catch the falling knife" a good strategy for an everyday investor?

Until recently, my understanding was that "crab investing" is the best strategy for an "everyday investor": Crab investing: Every pay check, buy (and hold) a diverse range (index ...
DarcyThomas's user avatar
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1 answer
277 views

Metal companies trading below book value

Is there a reason why metal companies, like Tata Steel and SAIL trade at such low prices compared to their book value? Even the industry P/B seems to be low. What am I missing?
Noel's user avatar
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Why Joel Greenblatt's Magic Formula ignores taxes and interest payments?

The "Magic Formula" works by choosing companies scored the best in two criteria: How good business is, how efficiently it can reinvest its own money and grow Return on Capital = EBIT / (Net Working ...
Alex Craft's user avatar
1 vote
1 answer
147 views

Question about a quote from The Intelligent Investor

I am having a bit of trouble understanding the following quote: Companies that are inherently speculative because of widely varying earnings tend to sell both at a relatively high price and at a ...
Addison's user avatar
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1 vote
2 answers
143 views

Why should general market conditions dictate how I invest in reasonable individual stocks?

On page 206 of the revised edition of Graham's, "The Intelligent Investor", Graham states: It is far from certain that the typical investor should regularly hold off buying until low market levels ...
Johnny's user avatar
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4 votes
2 answers
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Need help understanding a quote from The Intelligent Investor

I am reading The Intelligent Investor, and the follow quote doesn't make total sense to me: An industrial company’s finances are not conservative unless the common stock (at book value) represents at ...
Addison's user avatar
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4 votes
3 answers
391 views

Learn fundamental Analysis (example)

I'm completely new to stocks. I've already read The Intelligent Investor, One Up On Wall Street and another book for beginners about long term investing. My problem is that I don't know at all how to ...
Leonardo Lanchas's user avatar
3 votes
1 answer
227 views

Depreciation question from Benjamin Graham book

I am reading The Interpretation of Financial Statements by Benjamin Graham. Ch. VI, Depreciation and Depletion contains the following wording: When property is retired its gross value is deducted ...
user84609's user avatar
0 votes
2 answers
187 views

I have some money left

I got a scholarship, which is more than what I need for the period of my studies. So, approximately 300 to 400 euro is in excess, what can I do with this money? I am 20.
Atrox's user avatar
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1 vote
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Comparing values of 5s and 7% notes

I am a beginner in investment. I was reading Security Analysis (Sixth Edition) by Benjamin Graham, and on page 63 the last paragraph is written that: A third kind of analytical conclusion may be ...
chrononinja's user avatar
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1 answer
128 views

Am I thinking about whole company returns correct?

I'm trying to answer the questions: "if I owned all of a company, how much would I make?" and "once I know that, how much should I pay?" Let's say I owned Wal-mart outright (took it private and owned ...
raindog308's user avatar
2 votes
1 answer
155 views

Intelligent Investor Example from Chapter 1

As per Intelligent Investor Chapter 1 example In 1965 the investor could obtain about 4½% on high-grade taxable bonds and 3¼% on good tax-free bonds. The dividend return on leading common stocks (...
Prashant Singh Rathore's user avatar
2 votes
1 answer
136 views

Why did ESL need to pay $5.2Billion for Sears Holdings?

Related to this question. Yes, I know that the operations of a big company isn't directly related to personal finance, but understanding this seems an important part of investing, for instance SHLD ...
user avatar
3 votes
1 answer
78 views

What are the ways to price a holding company?

I would like to know how people value holding companies. I guess the most famous one is Berkshire ($BRK.A - $BRK.B). And others exist. These holdings usually have a lot of exposure to realestate, PE ...
YellowEagle's user avatar
2 votes
0 answers
99 views

P/E & P/B of stocks purchased by Warren Buffett

I am looking for data about Warren Buffett's famous purchases. For e.g. when Warren Buffett purchased stock of Coke, American Express, Moody's & other of his long term purchases what was the P/...
user93353's user avatar
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1 vote
1 answer
298 views

Shares issued vs Shares outstanding and where to find in morningstar.co.uk

When talking about stocks. I am a bit confused with the term "Shares issued" and "Shares outstanding". Can someone please clarify me what is the difference? Also I want to know where to find the ...
sfrj's user avatar
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2 votes
4 answers
986 views

Warren Buffett's calculation of the value of the company — very low discounting rate

I was read the book "The Buffett Way". The book claims that Warren Buffett uses a simple calculation to calculate the intrinsic value of a company. The regular way is to estimate future ...
user93353's user avatar
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