Sunday, August 27, 2006
My Investing Philosophy
The concept of value investing is very simple and logical. Buying shares at discount from its intrinsic value.
Intrinsic value of the firm is actually the future cashflow the firm can generate over its life discounted to present value. Several books delineate this issue in details. I believe everybody can master the calculation of intrinsic value with ease with the advent of spreadsheet software.
Vividly and unfortunately, future is abound with uncertainties and at best the intinsic value is just an estimate. Several parameters, such as growth rate, discount rate etc., assumed require knowledge on the industry the company operates and the company itself. This is so-called "Circle of Competence". The more you know the higher the chance you are right.
However, the margin of safety concept is also very crucial to guard against the ignorance and uncertainties.
Books recommended:
1. Intelligent Investor by Benjamin Graham
2. Warren Buffett Way by Robert Hagstrom
3. วัดมูลค่าหุ้นด้วยตัวคุณเอง โดย คุณสุมาอี้
Intrinsic value of the firm is actually the future cashflow the firm can generate over its life discounted to present value. Several books delineate this issue in details. I believe everybody can master the calculation of intrinsic value with ease with the advent of spreadsheet software.
Vividly and unfortunately, future is abound with uncertainties and at best the intinsic value is just an estimate. Several parameters, such as growth rate, discount rate etc., assumed require knowledge on the industry the company operates and the company itself. This is so-called "Circle of Competence". The more you know the higher the chance you are right.
However, the margin of safety concept is also very crucial to guard against the ignorance and uncertainties.
Books recommended:
1. Intelligent Investor by Benjamin Graham
2. Warren Buffett Way by Robert Hagstrom
3. วัดมูลค่าหุ้นด้วยตัวคุณเอง โดย คุณสุมาอี้
# posted by offshore-engineer @ 11:55 AM 
