Value investing is a philosophy embraced by successful investors. It focuses on identifying companies priced below intrinsic value.
**Core principles of value investing**
– Intrinsic value: estimate the true worth of a company.
– Margin of safety: buy caterpillar shares with a buffer.
– Patience: hold long-term.
**Examples of value opportunities**
– Often trades at attractive levels.
– Opportunity during downturns.
– Valuation below book value at times.
**Risks of value investing**
– Value traps: stocks that stay cheap for a reason.
– Requires deep analysis.
**Conclusion**
Value investing is a strategy of buying quality at discounts. By following fundamental analysis, intrinsic value, and margin of safety, investors protect capital.
