How To Guide For: A Look At Value Investing & How It Works

Value investing is an investment paradigm which was established by Benjamin Graham and David Dodd both Columbia Business School professors back in 1928. Value Investing involves buying securities that appear under priced. Such securities may be stock in public companies that trade at discounts to book value or tangible book value, have high dividend yields, have low price-to-earning multiples (the measure of how expensive a stock is), or have low price-to-book ratios. According to Warren Buffet he believes that the essence of value investing is buying stocks at less than their intrinsic value. Warren Buffet along with many other investing experts believe that value investing works because it pressures investors to buy low and sell high. Warren Buffet only bought stocks when they were undervalued and sold or reduced positions when they became overvalued. Warren Buffet explains value stocks as stocks that are below their intrinsic value compared to future growth potential. To get a better understanding of what Warren Buffet means please refer to the (Berkshire Hathaway 2000 letter to shareholders). For more information on value investing and how it works click the pictures below to read the articles.