Chapter 1

An Introduction to Value Investing

In This Chapter

arrow Defining value investing

arrow Brushing up on value investing math

arrow Deciding whether you're a value investor

No doubt, somewhere during your investing career you've heard something about value investing. You may know it's “what Warren Buffett does,” or maybe you've seen mutual funds described as “value-oriented.” You have a pretty good idea what the word value means in ordinary English, but how does it apply to investing? What is value investing, anyway? This chapter answers that question and helps you decide whether you're a value investor at heart.

What Value Investing Is — And Isn't

Broadly defined, value investing is an investing approach and style blending many principles of business and financial analysis to arrive at good investing decisions. To be more specific, value investing is buying shares of a business as though you were buying the business itself. Value investors emphasize the intrinsic value of assets and current and future profits, and they pay a price equal to or less than that value.

remember.eps Note the key phrases “buying ...

Get High-Powered Investing All-in-One For Dummies, 2nd Edition now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.