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The Intelligent Option Investor: Applying Value Investing to the World of Options by Erik Kobayashi-Solomon

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Chapter 5

THE FOUR DRIVERS OF VALUE

In my experience, most people who analyze investments spend far too much time getting distracted by trivialities. These trivialities end up pulling them off course, confusing them, and creating valuation rationales that are so complex as to become gothic. Getting carried away with unimportant minutiae also contributes to the difficulties people have in making investing decisions—whether to invest in the first place and whether to decrease, increase, or close an investment.

This chapter introduces a process to estimate the value of a company—based on the golden rule of valuation—by singling out and analyzing only a handful of drivers. It seems counterintuitive, but you will see later in this book that less information ...

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