Hot Features
Premium
Trade smarter, not harder: Unleash your inner pro with our toolkit and live discussions.
Many people treat market prices as a guide to the value of a share. The market, in its manic-depressive fashion, often sets prices that are far from the true value of the business. Be independent, do your own valuations and exploit prices rather than being led by them.
Given that the market does not always price shares correctly, accepting the market’s “value” placed on a share is to abdicate responsibility for thinking. Instead of evaluating the fundamentals of a business you are accepting what the average opinion of share buyers and sellers deems the appropriate price.
Price is not the same as value; as Buffett says, price is what you give; value is what you get. Make sure you underpay for value.
Market prices do not go up or down in response to what is happening to the company at any one moment. They move in response to the consensus view of the share buying community on what might happen to the company, its industry or the economy. But this consensus may be wide of the mark from what is occurring. On the whole, people are guessing, some more informed guesses than others. Market prices result from the average weight average of those guess, or “votes” in the form of buying or selling actions.
Great investors are so disciplined that they insist on treating the market as though it is not there, except in one important respect: they check to see if the market is doing anything foolish. From time to time the market gets depressed aboutnew companies..,………………………
………………To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
