A very warm welcome to Mr. Warren Buffett – my guru & the richest person in the world. Above all a living legendm, a great philnthropist & above all a great human being – on his maiden visit to India.
Today we touch on one of the most important concepts -which forms the cornerstone of Mr. Warren Buffett investment philosphy
Intrinsic Value
Very important concept. It is the Cornerstone of value investing.
Let us take the example of a House built. At any time it has an intrinsic value comprising of cost of land, material used, labor etc.. All these add up to form its Intrinsic Value.
Similarly for a business- its assets- plants, brand value, distributor network, customer loyalty, cash balance etc. add to make up the intrinsic value of a business- what exactly is the business worth?
To buy the shares of a business when they are selling for less than their Intrinsic Value is very important & is the right thing to do. When one is doing that one is investing. Otherwise one is speculating.
Tuesday, March 22, 2011
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