[...]... intentionally left blank VALUE INVESTING TODAY This page intentionally left blank P 1 A R T What Is Value Investing and Why It Makes Dollars and Sense The goal in Part 1 is to define value investing and establish clearly that the combination of rational fundamental analysis and irrational market prices creates opportunity for value investors As such, Part 1 is designed to address value -investing principles,... oceans without so much as a chart to guide them In Value Investing Today, you will find a way to design and implement a conservative and effective investment philosophy It is a philosophy, I emphasize, that has proved to be a successful means of building wealth and preserving capital WHAT TO EXPECT FROM THIS BOOK This edition of Value Investing Today has been updated with lessons designed to protect... “VALUE INVESTING ? 13 The average equity fund investor realized an annualized return of only 5.32 percent, compared to 16.29 percent for the S&P 500 Index If investors are to make money consistently, what is required is a return to farsighted, long-term investing In my opinion, that is the kind of investing that promises rational investors the greatest potential for rewards over the long haul INVESTING. .. I’ve already addressed regarding value investing in this chapter (its focus on individual company analysis to determine intrinsic value, the margin of safety concept, and its success over the long term), it certainly meets Graham’s definition of investing The distinction between investing and speculation is important for a reason Graham cited in 1949 and remains true today: “ in the easy language of... discipline they need to succeed through value investing In addition, I share insights gleaned firsthand from Graham when I became his acquaintance INTRODUCTION xiii My main purpose in writing this book is to help you take advantage of true investment opportunities by supplying you with the principles of the most successful means of investing over the past 70 years: value investing I will admit to being a convert... Value Investing Today was not designed as a how-to book for total novices, nor as a textbook for highly skilled professionals It should provide valuable assistance, however, to individual investors who have taken their first steps I have spoken with many such investors and have noted that some have picked up all sorts of investment ideas and notions that could prove frustrating and expensive So, Value Investing. .. defect in 12 WHAT IS VALUE INVESTING AND WHY IT MAKES DOLLARS AND SENSE common: they all reject the need or feasibility of making company-bycompany judgments about price and value or the need to examine time horizons or other factors that relate to the basic fundamentals necessary for long-term investing The combination of the age-old desire to get rich quick, plus the speed of today s TV and Internet... Benjamin Graham, widely considered the father of value investing, set down his central beliefs on how investors may achieve better-than-average results in the first chapter of his book The Intelligent Investor He suggests investors follow policies that are “inherently sound and promising” and “not popular in Wall Street.”1 That’s why Value Investing Today is important to you Finding stocks that are “inherently... develop the discipline and patience to accumulate substantial wealth The book includes fresh evidence reinforcing the benefits of value investing and draws on my more than 30 years in the investment industry Beyond mere facts and figures, this edition of Value Investing Today explores why the value approach to money management has been successful since first introduced by Benjamin Graham in the 1930s... loss and allow them to dispense with the need for making accurate estimates of the future I’ll discuss this in greater detail when I examine the differences between value and growth investing CHAPTER 1 WHAT IS “VALUE INVESTING ? 5 Before I do that, I want to illustrate the margin of safety concept using two charts In Exhibit 1-1, a horizontal line represents a hypothetical company’s intrinsic value—the . What Is Value Investing and Why It Makes Dollars and Sense 1 1 What Is Value Investing ? 3 2 Behavioral Biases: Why Value Investing Works 17 3 The Value. at george_hoare @mcgraw- hill. com or (212) 904-4069. TERMS OF USE This is a copyrighted work and The McGraw- Hill Companies, Inc. ( McGraw- Hill ) and its