Value Investing 101
Dhaval Singala
Co-Founder at Convergence Capital India | Equity Research Analyst | Retirement Advisor | Passionate about Value Investing
One of the positive outcomes of the pandemic was the increased participation in stock markets by the average person. As a result we at least know the term Fundamental Analysis. Fundamental Analysis is the statistical study of various Economic and Financial parameters with the objective of estimating the value of a particular stock/security.
What is Value Investing?
Of the many investment strategies, perhaps the most reliant on Fundamental Analysis is Value Investing. Value Investing involves careful picking up of those stocks that tend to trade at a value far less than what they are (statistically) worth.?Value Investors believe that certain stocks’ market price (trading value) do not reflect their actual value. Such Investors don’t believe in the efficient market theory.
Benjamin Graham is regarded by many as the father of Value Investing. In 1949, Graham published ‘The Intelligent Investor’, known as The investor’s Bible. One notable disciple of Graham is Warren Buffet, arguably the best value investors of our generation.
The Graham way :
1.??????Do not rely on market sentiments and shield yourself from “market noise”
2.??????Study reports of a company extensively to understand their operations and finances
3.??????Know what type of Investor you are – needed to develop a ‘Margin of Safety’ before investing.
To see the funny side, The Graham school was the original HODL gang, only that they actually had sound analysis to back their decisions.