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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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37
votes
7answers
11k views

Why does Warren Buffet consider real estate as productive asset?

In Berkshire Hathaway 2011 letter, Buffet said that: My own preference – and you knew this was coming – is our third category: investment in productive assets, whether businesses, farms, or real ...
37
votes
2answers
7k views

What does “gold reserves” on a gold mining company's balance sheet mean?

From a Reuters article: On Wednesday, [Newmont Mining Corp] reported gold reserves of 68.5 million ounces for 2017, unchanged from 2016, as it replaced reserves through exploration, projects, ...
20
votes
5answers
7k views

Why does Warren Buffett say his fund performance, relatively, is likely to be better in a bear market than in a bull market?

Currently, I am reading his annual letter. In his letter, he always says that his fund performance is likely to be better in a bear market than in a bull market, but I don't know why. Could someone ...
19
votes
6answers
37k views

Which Benjamin Graham book should I read first: Security Analysis or Intelligent Investor?

I recently graduated from engineering and I want to know more about investing. I'm particularly interested in Benjamin Graham's ideas. I want to read all of his books, but I couldn't decide which one ...
11
votes
5answers
1k views

How did Theranos have any value at all?

Theranos, an infamous case of a tech startup gone bad, was valued at over 9 billion dollars for audacious claims of revolutionizing the blood-testing industry. The trouble is, it had done so with ...
9
votes
2answers
3k views

Explanation on Warren Buffett's famous quote

What does Warren Buffett says in this article here "In the short term the market is a popularity contest; in the long term it is a weighing machine." What is the analogy with popularity contest ...
8
votes
2answers
635 views

Assessing the value of an ETF

I recently read through Graham's The Intelligent Investor and am looking at what index ETFs or Index Mutual Funds it makes sense for me to invest in. As I was considering this I realized that, at ...
8
votes
1answer
389 views

Analyze a security using Benjamin Graham's Defensive Investor Criteria

I would like some help evaluating a security using Graham's Defensive Investing Criteria (Chapter 14 of the Intelligent Investor). As an example security, let's look at NYSE:MEI and each of the ...
7
votes
3answers
17k views

If a company's assets are worth more than its market cap, can one say the shares must be undervalued?

Imagine a company sold a 10% stake in one of its assets to a 3rd party for $100 million. It would be fair to assume that the asset is worth $1 billion. If that company had 200 million shares issued, ...
6
votes
1answer
712 views

Learning investment--books to read? Fundamental/Value/Motley Fool [closed]

I am looking to learn how to invest better. Currently I follow the Motley Fool recommendations and have done quite well that way, but I'd like to educate myself better so that I can make better ...
5
votes
2answers
356 views

How Warren Buffett made his money

Is there any authoritative treatise or publication or book or white paper that explores (with all the math included) that how Warren Buffett really made his money? Something that explores the facts ...
5
votes
1answer
128 views

Is the gross amount of US debt dangerous for the small investor?

Does a large national debt affect the long term value of a small investor's worth, if not invested in commodities?
5
votes
3answers
550 views

Benjamin Graham: Minimum Size of the company

In the book "Intelligent Investor", Graham recommends a minimum annual sales figure of 100 Million $ as one of the criteria. How do we adjust this figure for Inflation and a country other than the ...
4
votes
1answer
200 views

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 ...
4
votes
2answers
151 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 ...
4
votes
2answers
479 views

When and where did Warren Buffett say: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1”?

Every woo-woo financial guru claims that Warren Buffett lives by this and said this at some point in time. When and where did this statement originally occur? What is the primary source?
3
votes
3answers
787 views

Do Fundamentals Matter Anymore in Stock Markets? [closed]

As a relatively new student to the market, and as someone who would inherently define himself as a value investor, I can't help but feel that current market conditions beg the question: do ...
3
votes
2answers
193 views

High frequency trading

Do High frequency trading firm pay commission ? I get charged a hefty price just to place one trade, and yet these guys are placing thousand of trade each day or even more
3
votes
3answers
102 views

Should one only pursue a growth investing approach for Roth IRAs

I just opened a Roth IRA and I have been doing some research on what to invest in. I am going to be fairly aggressive considering my age and do a 90/10 stock/bond mix, but I do have one question, ...
3
votes
4answers
288 views

Value investing

Does value investing work? More specifically, I've taken Dr. Damodaran's course on valuation (available online at his website) and have read parts of his textbook "Investment Valuation", and am coming ...
3
votes
1answer
87 views

What are the risk of high dividend closed end index mutual funds ?

I am finally taking ownership of my retirement my very very small nest egg and I am looking to undertake a value based strategy when it comes to investing. I have been gravitating towards high ...
3
votes
1answer
128 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 ...
3
votes
1answer
55 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 ...
2
votes
7answers
542 views

Why would any owner sell their company to Warren Buffet / Berkshire Hathaway?

Suppose that I'm either an owner or part owner (through shares) of Example Corporation. One day I get a phone call from Warren Buffett. He says that Berkshire Hathaway is interested in buying ...
2
votes
2answers
600 views

Take out a loan to invest

So, maybe a crazy idea. Let's say I take out a personal loan at my credit union with "0" to 4.5% interest with a payment I can afford from my personal income. Repayment over 5 years. I take the ...
2
votes
2answers
1k views

What Did Benjamin Graham Mean by Earnings Stability in The Intelligent Investor?

On page 386 it lists 5 criteria for stock selection for the enterprising investor. #2 is earnings stability - it reads "Earnings stability: No deficit in the last five years covered in the Stock Guide....
2
votes
2answers
737 views

Market Cap lower than Shares Outstanding x Share Price?

Why would the market cap for a company be lower than its shares outstanding x share price? Example: Meggitt trades at 544 a share with shares outstanding of 801,960,000. Their market cap is 4.37 ...
2
votes
1answer
448 views

Is there a step-by-step procedure to find a security's intrinsic value?

Recently I was reading about different fundamental analysis approaches, and specifically about Value Investing, as proposed by Ben Graham and David Dodd. This approach describes a strategy which based ...
2
votes
2answers
106 views

What are some of the key identifiers/characters of an undervalued stock?

How do you identify an undervalued stock? PE? EPS? Book Value?
2
votes
1answer
102 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 (...
2
votes
2answers
363 views

Warren Buffet'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 earnings &...
2
votes
1answer
100 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 ...
2
votes
1answer
255 views

Discrepancy in table 2.1 Pg 49 in the book The Intelligent Investor by Benjamin Graham

The above pic shows inflation at 5 years intervals. I am finding a bit hard to understand this table. For e.g. calculation of percentage rise in wholesale prices in 1960 seems to be wrong. Actual rise ...
2
votes
1answer
107 views

Isn't the subtraction of deprecation and amortization redundant in the calculation of Owner's Earnings?

I'm new to the world of Value Investing (and investing in general) and am trying to fully understand the fundamentals in calculating the Owner's Earnings of a company. According to this blog, Owner's ...
2
votes
1answer
383 views

How to evaluate growth stocks

What are good metrics to evaluate growth stocks? I have been following the site buffettsbooks.com and it teaches you how to evaluate value stocks based on Warren Buffet's principles. These are ...
1
vote
2answers
97 views

Value stocks appreciating

A value stock bought when undervalued should presumably increase in value and eventually is no longer a value stock. How long should this take and should it then be sold?
1
vote
3answers
212 views

The Intelligent Investor: Northern Pacific Railway example

I am reading the revised edition of Ben Graham's THE INTELLIGENT INVESTOR (First Collins Business Essentials Edition, 2006) with commentaries by Jason Zweig. In chapter 7, "Portfolio Policy for the ...
1
vote
1answer
112 views

Where to start with finding good companies to invest?

I know its a general question but where do you start with value investing and finding undervalued companies? There must be a quick way to find a list of undervalued good companies? Thanks
1
vote
3answers
253 views

Comparing the present value of total payment today and partial payments over 3 months

I'm trying to buy something. I can either pay $2495 in a lump sum payment, or $997 over 3 x monthly installments. Let's say I can invest in the stock market and get an 8% return on my money. What's ...
1
vote
1answer
90 views

Why do some companies report how well their EBITDA performed even if their overall net profit did equally well?

I recall reading somewhere that Warren Buffet once mentioned that he avoided companies that reported EBITDA growth, and considered it as a "useless metric". Ok fair enough. I guess EBITDA could ...
1
vote
3answers
103 views

Value vs Growth: are start-ups value companies or growth companies?

I'm a bit confused about the definitions of value and growth. I heard that companies that have high P/E ratios are growth companies. Are start-ups (think Silicon Valley start-ups, most of which fail ...
1
vote
4answers
1k views

Problems with Enterprise Value and better valuation techniques

Enterprise Value is often cited as a better measure of valuation than Market Capitalization. The formula for Enterprise Value starts with Market Capitalization and then adds debt and subtracts cash (...
1
vote
1answer
98 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 ...
1
vote
1answer
88 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 ...
1
vote
0answers
74 views

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 ...
1
vote
0answers
72 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/...
1
vote
1answer
246 views

A question about CAPEX when Calculating Free Cash Flow (FCF)

When performing the following to determine free cash flow: Free Cash Flow = Operating Cash Flow - Capital Expenditures Do I include only Capital Expenditures (13,732 in the example below), or do I ...
1
vote
0answers
55 views

What is intrinsic value of stocks with diluted voting power?

Recent technological companies went to IPO with publicly traded stocks that have 1/10th of voting power of the privately held stocks. Facebook, Google, GoPro are examples of such companies. Usually ...
0
votes
2answers
147 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.
0
votes
1answer
118 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 ...