A Quote by Eugene Fama
In an efficient market, at any point in time, the actual price of a security will be a good estimate of its intrinsic value.
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In an efficient market at any point in time the actual price of a security will be a good estimate of its intrinsic value.
Market prices for stocks fluctuate at great amplitudes around intrinsic value but, over the long term, intrinsic value is virtually always reflected at some point in market price.
Intrinsic value can be defined simply: It is the discounted value of the cash that can be taken out of a business during its remaining life. The calculation of intrinsic value, though, is not so simple. As our definition suggests, intrinsic value is an estimate rather than a precise figure, and it is additionally an estimate that must be changed if interest rates move or forecasts of future cash flows are revised.
Market value is irrelevant to intrinsic value. ... Unqualified judgment can at most claim to decide the market-value - a value that can be in inverse proportion to the intrinsic value.
In essence, the stock market represents three separate categories of business. They are, adjusted for inflation, those with shrinking intrinsic value, those with approximately stable intrinsic value, and those with steadily growing intrinsic value. The preference, always, would be to buy a long-term franchise at a substantial discount from growing intrinsic value.
In essence, the stock market represents three separate categories of business.They are, adjusted for inflation, those with shrinking intrinsic value, those with approximately stable intrinsic value, and those with steadily growing intrinsic value.
The latest trade of a security creates a dangerous illusion that its market price approximates its true value. This mirage is especially dangerous during periods of market exuberance. The concept of "private market value" as an anchor to the proper valuation of a business can also be greatly skewed during ebullient times and should always be considered with a healthy degree of skepticism.
Value in relation to price, not price alone, must determine your investment decisions. If you look to Mr Market as a creator of investment opportunities (where price departs from underlying value), you have the makings of a value investor. If you insist on looking to Mr Market for investment guidance however, you are probably best advised to hire someone else to manage your money.
The basic concept of value to a private owner and being motivated when you're buying and selling securities by reference to intrinsic value instead of price momentum - I don't think that will ever be outdated.
Let me say this before rain becomes a utility that they can plan and distribute for money. By "they" I mean the people who cannot understand that rain is a festival, who do not appreciate its gratuity, who think that what has no price has no value, that what cannot be sold is not real, so that the only way to make something actual is to place it on the market. The time will come when they will sell you even your rain. At the moment it is still free, and I am in it. I celebrate its gratuity and its meaninglessness.
We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market. Let him study security values and initially test out his judgment on price versus value with the smallest possible sums.
Individual security bargains may be located by the process of security analysis practically at any time. They can be bought with good overall results at all periods except when the general market itself is clearly in a selling range for investors. They show up to best advantage during the years in which the market remains in a relatively narrow and neutral area.
I don't believe all this nonsense about market timing. Just buy good value and when the market is ready that value will be recognized.
Basically my point of view on unicorns is that private companies which have sky high valuations, it doesn't really mean anything in the real world until it's marked to market. And there's only two ways things get marked to market in venture capital: Either a company is acquired by another company for cash or marketable security, or it goes public, and then it has reporting requirements and then the market will determine the value.
Gold has intrinsic value. The problem with the dollar is it has no intrinsic value. And if the Federal Reserve is going to spend trillions of them to buy up all these bad mortgages and all other kinds of bad debt, the dollar is going to lose all of its value. Gold will store its value, and you'll always be able to buy more food with your gold.
The available supply of gold and silver being wholly inadequate to permit the issuance of coins of intrinsic value or paper currency convertible into coin of intrinsic value or paper currency convertible into coin in the volume required to serve the needs of the People, some other basis for the issue of currency must be developed, and some means other than that of convertibility into coin must be developed to prevent undue fluctuation in the value of paper currency or any other substitute for money intrinsic value that may come into use.
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