Investment Policy (Based on Benjamin Graham)
http://myinvestingnotes.blogspot.com/2008/08/investment-policies-based-on-benjamin.html
Central to Benjamin Graham's teaching is the ability to calculate Intrinsic Value.
His value investing approach: Buy at a discount to intrinsic value. Your gain comes from market realising the true intrinsic value given time.
Philip Fisher's growth investing approach: Buy at fair value, i.e. buy at intrinsic value. With earnings growth, you will realise a higher price for the shares.
In buying at a discount to intrinsic value, the value is in the bargain price, and the favourable upside reward / downside risk ratio.
In buying a growth stock at fair price, the value is in the earning power of the company. This creates the value in the stock although you are acquiring this at a fair price. Of course, if you can acquire it at a bargain price, the better.
Warren Buffett uses both strategies and cleverly grouped Philip Fisher's growth investing approach as value investing too, calling value investing and growth investing as sides of the same coin. He is pragmatic.
In either approaches, overpaying for a stock will be detrimental to your financial health.
http://myinvestingnotes.blogspot.com/2008/08/investment-policies-based-on-benjamin.html
Central to Benjamin Graham's teaching is the ability to calculate Intrinsic Value.
His value investing approach: Buy at a discount to intrinsic value. Your gain comes from market realising the true intrinsic value given time.
Philip Fisher's growth investing approach: Buy at fair value, i.e. buy at intrinsic value. With earnings growth, you will realise a higher price for the shares.
In buying at a discount to intrinsic value, the value is in the bargain price, and the favourable upside reward / downside risk ratio.
In buying a growth stock at fair price, the value is in the earning power of the company. This creates the value in the stock although you are acquiring this at a fair price. Of course, if you can acquire it at a bargain price, the better.
Warren Buffett uses both strategies and cleverly grouped Philip Fisher's growth investing approach as value investing too, calling value investing and growth investing as sides of the same coin. He is pragmatic.
In either approaches, overpaying for a stock will be detrimental to your financial health.
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