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Fundamentals Of Investment Valuation And Management
Value investing was a strategy first developed by American economist Benjamin Graham. One of Graham’s pupils, Warren Buffett, took his principles and used them to become one of the most successful investors in the modern world.
Value investing is one of many strategies used by investors to make money in the stock market. The main underlying principle is to find stocks that are undervalued. A stock may become undervalued for many reasons even simply overlooked by the market because investors are looking for faster profits elsewhere such.
The dotcom bubble is an example of this. Stock prices in the technical sector were skyrocketing with investors chasing the promising returns. What many didn’t know was that these stocks were trading many times above their actual value. Warren Buffet wisely kept out of the tech stocks instead he stuck faithfully to his time tested value strategy which in the end served him well when the dotcom crash came.