Value Investing - 8 Rules followed by Great Value Investors like Warren Buffett | ETMONEY

Value investing is an investing style pioneered in the early 1920s at Columbia Business School by Benjamin Graham and David Dodd. Two decades later, Warren Buffett mastered the value investing approach and went on to become the richest investor ever. Topics Covered: 00:00 - INTRODUCTION 01:22 - 1. VALUE INVESTING IS NOT SPECULATION 02:21 - 2. KNOW THY INTRINSIC VALUE 03:38 - 3. SEEK A MARGIN OF SAFETY 04:57 - 4. THINK YEARS, NOT MONTHS 06:13 - 5. HAVE A CONTRARIAN MINDSET 07:29 - 6. AVOIDING LOSSES IS THE FIRST PRIORITY 09:19 - 7. KNOW WHAT YOU OWN AND WHY YOU OWN IT 10:33 - 8. PLAY WHEN THE ODDS ARE IN YOUR FAVOUR 11:38 - SOME GOOD RESOURCES ON VALUE INVESTING 👉 Resources: ► 📚Security Analysis by Benjamin Graham & David Dodds : https://amzn.to/3pFrEFE ► 📚The Intelligent Investor by Benjamin Graham : https://amzn.to/3eGfsy6 ► Professor Bakshi’s website https://www.sanjaybakshi.net/ ► Nick Sleep’s letters https://igyfoundation.org.uk/wp-conte... ► Warren Buffett’s letters https://www.berkshirehathaway.com/let... 1. VALUE INVESTING IS NOT SPECULATION Value investing is intelligent investing and needs to be supported by detailed research and analysis. The focus should be on avoiding capital losses and generating adequate growth in the capital as against playing out a speculative high-odds-low-probability venture 2. KNOW THY INTRINSIC VALUE Value investors believe that, over the long run, the price of a stock generally matches its underlying value which is also called its intrinsic value. This means if a stock is presently priced below its intrinsic value, then there is a case for buying the stock at this discounted price. The intrinsic value continues to be the primary number in any value investing exercise 3. SEEK A MARGIN OF SAFETY The difference between a stock's current market price and its intrinsic value is called its margin of safety. Most value investors often seek a margin of safety ranging from 30 to 60% to support their investing rationale which, if we connect to our earlier point on intrinsic value .. means that the margin of safety also represents the potential upside to your investment if all your assumptions come true 4. THINK YEARS, NOT MONTHS Sometimes, it can take a pretty long time for a company’s share price to match its intrinsic value. This hibernation period can run into many years and the rules of value investing require practitioners to show patience during that time and wait for the market to recognize the company’s true value in terms of the stock price 5. HAVE A CONTRARIAN MINDSET A good value investor can ignore all the noise that’s happening around him can go against momentum, can go against conventional wisdom, can ignore the so-called stock market gurus and the value investor can do something that no one else seems to be doing 6. AVOIDING LOSSES IS THE FIRST PRIORITY The number 1 rule of value investing - Avoid Losses Successful value investors minimize the risk of big losses by keeping a large margin of safety .. not chasing speculative opportunities and by focussing only on those sectors and businesses that they truly understand 7. KNOW WHAT YOU OWN AND WHY YOU OWN IT Value investing is not a passive strategy. Stock selection is exactly what distinguishes value investing from other forms of investing. At the heart of a value investor’s success is the deep knowledge of the companies they own. It’s critical to stay updated on all major developments affecting the company 8. PLAY WHEN THE ODDS ARE IN YOUR FAVOUR Much like the rules we have seen thus far, value investing requires investors to respect the market dynamics and play when the odds are in their favour. #ETMONEY​ #ValueInvesting #MutualFunds 👉 To invest in Direct Plans of top Mutual Funds for free, download the ETMONEY app: https://etmoney.onelink.me/unJQ/5ca1a... 👉Read more such informative articles at https://www.etmoney.com/blog​ 👉 Follow us on: ► Facebook:   / etmoney   ► Twitter:   / etmoney   ► Instagram:   / etmoney_official   ► LinkedIn:   / et_money