Chapter 1. Value Investing 101
1.1 What is value investing?
“Value investing is buying securities at a significant discount to their underlying value and holding them until their value is realized. The element of the bargain is the key to the process.”
In this chapter I’ll go through the basics of value investing.
Value investing is defined by a set of principles rather than hard and fast rules. These principles were popularised and articulated by Benjamin Graham nearly a century ago in two famous books, Security Analysis and The Intelligent Investor.
The practice of trading shares in businesses goes back centuries. Historically, shares were seen as highly speculative investments: a tool for punters to take bets on the short-term ...