Value Investing

• 19 Dec 2023

Value investing entails purchasing assets below their intrinsic value, anticipating future appreciation. It was pioneered by Benjamin Graham and popularized by Warren Buffet on the belief that an asset's price will eventually match its intrinsic value.

• It focuses on exploiting the gap between an asset's price and intrinsic value for profitable returns, taking advantage of market fluctuations by buying during crises and selling during booms.
  • For example, if a company's stock has an intrinsic value of 100 rupees per share, but the market price is only 60 rupees. A value investor seizes the opportunity, buying the undervalued stock.
  • As the stock price rises toward its intrinsic value. The value investor then sells the stock at a profit, having taken advantage of the initial undervaluation.
• This contrasts with efficient market theory, as value investors capitalize on disparities between market prices and intrinsic worth, leveraging undervalued assets.