Lux Investing
Question about value investing.?
i am reading a book called Value Investing from graham to buffett and beyond. is it a good book? where do i go from here? i want to try hands on things like analyzing FS, but i do not exactly know what im doing is right, for example appraising current assets and so on, evaluating macroeconomic drivers. it all seems so ambiguous. like too many subjectiveness. in day trading, i am completely mechanical. in analyzing stocks for investing, i find there are no strict borders, and the effort may not pay off at least after a year or two, or even longer. one key worry i have is, how do i accurately determine the intrinsic value when thers so much subjectivity to this process. once i have a good measure of intrinsic value, where to go from there? experienced investors must feel some level of confidence about their analysis, i currently do not feel it. thank you.
Public Comments
- There is another book you might try. The'' little book that beats the market''..by greenblatt..............it is mechanical and along the same lines as Buffett..........it is a little book.............. makes things clear.....
- Hello , I need an investor to invest to me , I have some good Project , await your respond to my email address : seethuyhong@yahoo.com , thanks !
- Hi John, Try out the following books (other than the little book that beats the market, that's a good book too): - Value Investing today by Brandes - The Little book of value investing by Browne - The warren buffet way by Hagstorm For more heavy reading, try: - Common Stocks & Uncommon Profits by Fisher - Business Analysis & Valuation by Palepu/Healy - The Intelligent Investor by B.Graham
- Here's probably a different look on value. Value has a different meaning for different people who are involved in the "food chain" of value. When a company first talks about an IPO the company people have an idea of how much money they want to raise, they've got an idea of their business, growth, etc. Then the Wall Street people get involved and each of them has their own idea and each of them wants their piece of the pie for contributing their ideas. Then they have to package it together and get the underwriters and banks involved. Everyone gets their piece of the pie. By the time it gets around to the public, the idea of "value" is different than from when it started. (Probably "overvalued.") Here's an analogy. Let's say there's a factory that makes paper clips. The company knows where to buy the metal, maybe they mine it and smelt it. So they've got some costs there. They've got the operating costs of the factory, employee salaries, etc. They make a whole bunch of paperclips which they sell to their network of wholesalers. Once its in the wholesaler's hands the factory has their profit. They basically have turned a raw material into a product and charged for it. Now the wholesalers have their network of retailers they can sell to. So their profit comes from their means of distribution and storage as well as having a bunch of contacts in their Rolodex. The retailers have their local neighborhood of stores and they mark up the price to sell it to the public. Now if you walk into the store and buy a bunch of paperclips can you resell them for a profit. No. Because someone else can just walk into the same store and buy them for the same price. So the public, at the bottom of the "food chain", is looking at something that already has all the value built into the paper clip. No more value can be put in there. Same thing with stocks. As you can tell, I don't believe in value investing, unless you're working at the source of the food chain.
