1: value investing definition
2: how value investing works
3: value investing vs growth investing
4: example of value investing
Opening information:
Value investing sentence breaks into two words value and investing, value means the worth of one item and investing means putting something to grow something in return.
Value investing means putting money into something to make something based on the worth of something, so now let’s have a look at what is value investing, how value investing works in the stock market, and what the difference between value investing and growth investing, finally one clear example about the value investing.
1: value investing definition
Mr. Lindo is a stock Investor, like million share Investors. lindo is the one who follows the value investing method to invest in the public market.
Lindo Whenever makes an Investment he doesn’t care about price and other investment technical things that are not mostly important, instead he mostly and Ultimately spends time to understand the business’s worth.
He analyzes the business worth based on how well certain businesses efficiently grow the certain equity worth over time.
To purchase any kind of business shares he takes a net income and finds an earning per share of the one Industry.
Then based on the earnings of each share he would multiply with the average equity growth rate and finalize by multiplying the PE ratio of such a company.
Using his calculation he made his analysis and determined the business’s worth effectively, then he bought the shares below such worth of the business
Here the lindo valuations investing based on the business worth are called value investing in the stock market, so now let’s dive into how this works in the public market.
2: how value investing works
Value investing represents value in investing, but value investing is shown as one method in a public market by Benjamin Graham.
Today world calls Benjamin Graham a father of value investing, not because he was the father of value investing but because he had made millions of dollars by investing in public Industries by considering each company’s value.
Moreover, this same value investing method is the one, which is followed by Warren Buffet one of his students who made more than 100 billion dollars in net worth.
This value investing is not magic, if you believe it’s magic investing, then first consider what is rule investing, value investing is a method to make a decent amount of return by following the concept of Benjamin Graham and Warren Buffet.
Value investing never works for people who want to speculate or gamble short-term traders Invest short-term traders It only works for who want to become wealthy and steadily.
Growing the wealth and net worth of one person consistently would be hard, but it’s possible when certain Investors build slowly with low risk and huge profits on rare opportunities in the whole market.
Other than value investing, there are hundreds of methods in the stock market, Many investors build millions and billions of dollars in fortune through other methods of investing.
Therefore value investing is not for those who looking to become rich within one year value investing is not a rule of investing instead it’s just a concept of one investing method.
Buying the shares of one Industry below your valuations of worth for a particular share using the market price is known as value investing.
Most people confuse value investing and growth investing, so let’s jump into the key differences anyway.
3: value investing vs growth investing
The difference between value investing and growth investing is, that value investing is the one in which buying a business of one Ownership depends on its value.
Next growth investing represents investing based on the growth of one industry, this growth investing method is also similar to value investing. To make you more clear about value investing let’s look at one clear example below.
4: example of value investing
Say you had to invest in two stocks using a different kind of method to get decent returns over your investment.
On one stock you purchased the shares based on the worth of such business shares and on another stock, you had not bought based on the value instead you had purchased one stock because one Industry had grown dramatically increasing even if it was trading above the value price.
Value investing and growth investing are the same valuation method and purchase, but value Investors won’t purchase stock when its price is above the business value.
However the growth investor purchased stocks even at a market price above the valued price, so the growth investing and valued investing did not have any difference in the t’s same things but Investors separated the investing method jseparatedurchase difference.
Non-Market rule : #100168
Value investing is not considered a market rule, because its valuation method that developed by Benjamin Graham and Warren Buffett, therefore if you face any consequences such as profit or loss. you’re completely responsible from your side.
If your investor and not comply or align investing based on market rules please learn about how to regulate your investments under your control with the use of Rule investing.