ValueInvesting

Key Essence of

Value Investing

Safety of Principal

Rewarding Returns

Robust Research

Fundamental Concepts of Value Investing

Rely on Intrinsic Value

Every company has an Intrinsic value that is determined by fundamental analysis

Value investors always choose businesses for investment, based on their Intrinsic value rather than market value

Rely on Margin of Safety

The underlying focus in value investing is “Capital Preservation”

Focus is on “Return of Capital, not on “Return on Capital”

The concept of Margin of Safety provides the downside protection

Value investors buy stocks at bargain prices, which gives a better chance at earning a profit

Stocks bought at bargain prices makes it less likely for the investor to lose money if the underlying business doesn't perform as expected

Rely on Business Analyst Approach

Value investors are Business Analysts, not Market Analysts

Value Investors focus on Business Action, not on Market Action

A Value Investor’s investing attitude is “Not buying a piece of paper – but buying a piece of business”

Don’t Follow the Herd

Value investors follow contrarian approach

They want to own companies that they know have strong prospects and sound financials, regardless of what the market view is

Value Investing requires Diligence and Patience

Value investing is a long-term strategy and does not provide instant gratification

Value investors believe that one must have the patience and diligence to stick with the investment philosophy

How to approach

Value Investing

Determine the investment approach that you are comfortable with…

As a value investor, you do not buy stocks, but you own businesses

So, invest only in businesses that you can understand

Identify stocks based on that approach…

Invest in businesses
that are with favourable long term prospects
that are fundamentally strong and managed by competent people
that are available at an attractive price

Price you pay determines the value you get

When prices go down it is easier to find sensible opportunities

Be objective while evaluating businesses for investment…

Do not get excited by businesses that are doing well at present
Hunt for bargains in industries and companies that are out of favour
Determine the Intrinsic value of the business and pay a fair or bargain price

Develop a disciplined approach to investing…

Focus on preserving capital with steadfast commitment to Margin of Safety
Do not jump at every opportunity, learn to say “No”
Do not jump ship at the first sign of trouble
Remain mentally flexible in seeking value

Believe in power of compounding…

Make the right investment after thorough evaluation
And develop the ability to be patient

Celebrity

Value Investors

“Confronted with a challenge to distil
the secret of sound investment into three words,
we venture the motto, Margin of Safety.”

Ben Graham

“Rule #1: Never Lose Money;
Rule #2: Never forget Rule #1.”

Warren Buffett

"Value investing is at its core the marriage
of a contrarian streak and a calculator."

Seth Klarman

“This matter of training oneself not to go with the crowd but to be able to zig when the crowd zags, in my opinion, is one of the most important fundamentals of investment success.”

Philip Arthur Fisher

“Value investing is the stress-free
route to investment success. ”

Christopher H Browne

“You don’t have to be fully invested all the time.
Have patience, keep your standards. ”

Irving Kahn

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