What is Value Investing?
is a strategy built on a simple idea: sometimes trade at prices lower than the true worth of the underlying business. A tries to identify these underpriced companies, buy them, and wait for the market to recognise their real value.
Where did come from?
The intellectual foundation was laid by Benjamin Graham, whose book The Intelligent Investor, published in 1949, remains one of the most influential works in investing. Graham's most famous student was Warren Buffett, who went on to become one of the most successful investors in history by applying and evolving these principles.
How do find underpriced ?
They look at fundamental measures of a company's worth: its , assets, cash flow, and debt and compare them to the current share price. If a company appears to be worth significantly more than its market price suggests, it may be considered a . The difference between and market price is what Graham called the .
Why do underpriced exist?
Because markets are driven partly by emotion. Fear, pessimism, and short-term thinking can push prices below rational levels. A company that has had a bad quarter, or operates in an unfashionable , or is simply overlooked, may trade cheaply even if its underlying business is sound.
What are the risks?
A can be cheap for good reason. Sometimes what looks like an undervalued company is simply a struggling one. requires deep analysis, patience, and the willingness to hold positions through periods when the market continues to disagree with your assessment.