Amit Kumar Singh
January 11, 2011 6:41 pm
Is it value investing in stocks with its book value close to or greater than its current market price ? ( obviously if, fundamental of company is good )
It is a complicated procedure with lot of assumptions and really a specialist’s job.
Surely, it is not simply a matter of looking at the book value, the share price and declare wow, that share is trading at a discount from its book value and hence it is a sure buy!!
How can we calculate the intrinsic value of a stock? Please share your knowledge with one example.
How can we calculate the intrinsic value of a share? Please share your knowledge with one example.
Book value is a complicated and sometimes quite erroneous value. Same with P/E.
Known factors including book value, earnings, etc are already factored in the price of a stock.
Value-investing = investing in companies which are trading at a price which is quite less (=margin of safety) than the Intrinsic Value.
This intrinsic value is not equal to the book value!! Though, book value is a part of the intrinsic value.
Hope this explains.
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