Copyright Amdamax Eurl, France. Terms and conditions |
Value investing consists in investing in assets by paying a price which is lower than the estimated asset’s intrinsic value with a margin of safety.
Value investing is opposed to other investing styles, such as trend following, which consists in choosing assets depending on their recent price changes, or macro investing, which consists in predicting macro trends of the economy.
Value investing as an investment style has yielded returns that are far superior to the stock market on the long run.
Value Investing is the philosophy behind the success of the most famous and successful investors, such as Warren Buffet, Walter Schloss or Seth Klarman, to name a few.
In order to practice value investing, it is necessary to decide one’s investment horizon, know the price of the asset (this is the easy part) and estimate its intrinsic value.
And here begins the fun….