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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Graham Osborn who wrote (61847)	4/8/2019 4:17:07 PM
From: bruwin	Respond to of 78783

" I think Graham's greatest contribution was teaching regular investors how to avoid the mistakes of the 20s.' As we've discussed before, one of Graham's "Investing Cornerstones" was based on the Book Value per share compared to the Selling price of that share. If the selling price was relatively lower than the Book price then Graham saw that as "undervalued" and would buy the stock on the assumption that the selling price must eventually move up to that Book value. That's what he got Warren Buffett to do in the early days when Buffett was prepared to work for Graham for no salary. Buffett had to scour Barrons looking for "Undervalued" companies. After a long while of doing that it occurred to Buffett that the selling price of those "Undervalued" companies didn't always revert back to that higher Book value. In fact some of those companies saw their shares prices continue their downward spiral until they eventually went bankrupt. Needless to say, there were occasions when there were good reasons why the market was trading a company's shares well below its Book value per share. And those reasons evolved into Bankruptcy. That's when Buffett decided that this Book value to selling price comparison wasn't all that it was cracked up to be. And slowly but surely he moved away from it and developed an Investing Strategy based on the principle of a company having DURABLE COMPETITIVE ADVANTAGE. Over time he identified those components within a company's financial statements that related to a company having Durable Competitive Advantage .... and the rest is history .....