The Concept of Intrinsic Value

Education is the greatest long life investment because you invest in yourself. Concepts such as Intrinsic Value Analysis from Warren Edward Buffet and Benjamin Graham give us a great deal about what particular knowledge are we after in the arena of educating oneself.

Perhaps and most probably the greatest thing about value based investment is that it is inherently intrinsic i.e. it is based upon the investor's idea of himself or herself: the better you know yourself - the better will be your investments! Yes, it is that simple.

The word intrinsic in the Intrinsic Value Based Investment Methodology is of greatest importance as this word only inwardly joins the individual person with his (perpetual) greater self.

Intrinsic Value Analysis demands that a person may start his/her investment analysis with the start of knowing his/her "natural area of competence" in carrying out the analysis upon the investments he/she wishes to partner with.

While the prospective learner/investor wants to start with the concept of Intrinsic Value Analysis, however, Intrinsic Value Analysis wants to start with investor/learner - forming a one solid soul which is greater and paradoxical in nature as compared to the two "distinct" entities i.e. the investor/learner and the concept of Intrinsic Value Analysis. What is born out of this concept is a self perpetuating soul trying to find itself in the realm of financial activity. I believe what could be better than this in terms of an Ideal Economic Model.

We may visualize this phenomenon as follows:

As the investor searches in himself/herself for answers of the unknown it comes to know that developing oneself means having answers to the uncertain future; such is the capacity of knowledge once broadened enough to be stable.

Through developing the Micro-me the investor/learner is able to visualize the Macro-Me - as he/she can see the herd of investors to follow him/her on definite grounds.

Foundations of Intrinsic Value Analysis:

A) A Business You Understand

B) Favourable Long-Term Economics

C)Able and Trustworthy Management

D) A Sensible Price Tag

Earnings Power (Yield) vs ROE

Margin of Safety

Goodwill Analysis and "Break-Even Analysis":

EPS/PPS - Breakeven in terms of years

PPS/BVPS - Goodwill as times of book value per share

BVPS/PPS x 100% = Answer - 100% = Percentage of Price as Economic Goodwill

Elliot Wave Analysis - Technical Analysis

The myth of Share Price has to do something with return e.g. $50 price per share gives more return than a stock of price $500 per share.

Timing the Market: Greatest Return in the Shortest Possible Time i.e. Margin of Safety plus Elliotwave Analysis for a stronger conclusion and greater returns per unit of time.

There are no Good or Bad companies but only expensive and cheap stocks.

Industrial Analysis - The Chain of Analysis


Test 1

Investing as purchasing power