This website is dedicated to Benjamin Graham's principles of investing and valuation of stocks. Please note that I am a blogger and an individual investor. Certainly, I don't call myself an expert in computing intrinsic values of underlying businesses.
Please consult your financial advisor for individual advice.
I am currently reading Ben Graham's book called "The Intelligent Investor". This book is considered to be THE BIBLE of value investing. Warren Buffet has mentioned that this is the best book on investing. He read it when he was very young and since then, he has never turned back. As I go though the chapters in the book, I will update this blog with my interpretation of Ben Graham's notes. Having said that, if you have no plans to read more on value investing, you just need need to be aware of 2 basic principles :
1. Buy good businesses : Remember stocks represent companies which have employees, infrastructure and business models. When you are buying a stock, you are buying a fractional ownership of the underlying company.
2. Buy at a discount to the intrinsic value : No matter how much confidence you might have in a company or how much experience you might have in evaluating businesses, you can always end up with the possibility of paying more or paying the intrinsic price itself. This approach will leave you no room to account for huge market declines or an error on your part in evaluating a business in the first place. Your safest bet is to buy at a considerable discount so that you can leave enough margin to account for any misinterpretations on your part.
More to come....
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1 comment:
Nice intriduction, i will read your notes on that book because i iund it difficult for me to understand.
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