economic / 3 posts found

What is Value Investing?

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The idea of value investing is credited to Benjamin Graham in his 1934 book “Security Analysis.” In the book Graham spoke of two essential qualities: The degree of safety of principal, and a satisfactory rate of return. In his margin of safety principle, which Warren Buffett later adopted, Graham noted that there should be a sufficient difference between the price of a stock and the intrinsic value of a company. A buying opportunity would be when the price is at least lower by two-thirds of the intrinsic value of the company to provide a sufficient safety cushion. The intrinsic value is obtained by multiplying the estimated earnings of a company by an appropriate capitalization factor then adding the net real assets of the company.

Size Doesn’t Always Matter

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Here’s an investment question to consider: Two years ago, would you have invested in company “A” which had zero debt, an income that increased by 61 percent, and which had just become the world’s largest firm with a market cap of $600 billion? Or would you have invested in company “B” which had 16 percent debt, and whose income had decreased by 27 percent?

Investing Fast and Slow in Inequality

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What we can learn from Africa.

If you suspect life is unfair, Oxfam just gave you the numbers to back it up. In a recently published report, the anti-poverty charity presented a staggering statistic: the world’s 85 richest individuals now own around $1.7 trillion, which is as much as the poorest half of the world’s population of 7 billion. In fact, the 1 percent richest people in the world own $110 trillion, which is 60 times the wealth of the poorest 3.5 billion people.