I often see value investing, band investing, etc. in the bullring. When I was a newbie myself, I didn't know much about these. Today, I'd like to spread the science to novice friends in detail about what genres of investing actually are.
I. Value investment
First, I'd like to introduce value investing. Everyone must have heard of value investing.
Value investing refers to searching for stocks whose market price is lower than their intrinsic value through basic analysis of a company's financial performance.
We often hear people say, “Because he focuses on studying corporate fundamentals when selecting stocks, he makes value investments.” In fact, this statement is inaccurate.
Let's assume that P0 is the current price of the stock, V0 is the company's current value, and Vn is the future value of the company, then value investment can be expressed using the following formula:
Therefore, value investors focus on finding good companies that are undervalued and make money through the return of the enterprise's value or dividends.
This strategy was first proposed by Benjamin Graham (Benjamin Graham), and later developed by Buffett and became known to the world.
Recommended books: “The Easiest Thing in Investing”, “Snowballing”, “Important Things in Investing”
II. Growth Investment
Growth investment also requires a basic analysis of the company's financial performance, but it does not force the value to be undervalued; it only requires a reasonable valuation. The key is that the company's intrinsic value can grow rapidly.
Then, growth investment can be expressed using the following formula:
So, growth investment...