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Investments ˇ¤ Value Investing

by fredi fernández ˇ¤ 1 week ago

How to get the best return

Those interested in the world of finance and the stock market have available a long list of strategies to buy and sell stocks. There are all kinds: some require a long learning process, others are summed up in a single book. One of the most popular methods among professionals in asset management is the method of investment in the value of companies, also known as value investing.

Benjamin Graham and David Dodd were responsible for baptizing this discipline, which is based on the calculation of the intrinsic value of a financial asset or, in our case, a company, regardless of its evolution in the bag. According to Graham, the intrinsic value are the "assets, profits, dividends, clear prospects, in contrast, for example, market quotations established by artificial or distorted handling due to psychological excesses".

with the practical application of the method of value investing, the investor may benefit may benefit from these market distortions. Provided that, after a thorough study of the data of a business, find a company with an intrinsic value than the vagaries of the market.

Decades after the two authors establish the foundations of value investing in his book Security Analysis, his faithful followers, and students, as Warren Buffett, Charlie Munger, Walter Schloss and Seth Klarman have demonstrated the effectiveness of their method, recording for years higher returns than the stock market, represented by the selective Standard & Poor's 500.