Many people invest money in the share markets with an objective to make a fast buck, intending to purchasing shares at the prevailing price and selling the same at a higher price. This is speculation and not investing. Thousands of people allover the world, loose their precious savings in the share markets in this speculative activity.
Value Investing, on the contrary, is purchasing securities in the market after thorough fundamental research, at a price lower than their intrinsic values,with an intention of holding them for a very long time, and profit from the regular dividends and appreciation in the values and prices, over such very long periods of time.
Safety of investment or principal and loss aversion are fundamental to value investing.
My guru Warren Buffett repeatedly says that investing success does not require high intelligence or extraordinary knowledge, but simply sound frame of mind. Any normal individual can learn and attain significant investing success.
|Picture depicts the pendulum nature of markets swinging between enthusiasm and pessimism|
Markets constantly vacillate between bouts of extreme enthusiasm to extreme pessimism, throwing up opportunities for intelligent value investors to make unforeseeable gains.
Value Investing is an investment philosophy developed and taught by Benjamin Graham and David Dodd in Columbia Business School in 1920s. Warren Buffet, who studied under these great Gurus, is successfully practicing their teachings over the last four decades.
Here people can learn and practice value investing.
While the principles of value investing are the same and hold good for all countries and markets, I being located in India, the examples are based on indian securities and markets.