Value Investing

The phrase "value investing" refers to an investment strategy that involves investing in companies whose stocks are regarded as under-priced based on key point of analysis. The argument is that the stocks are actually being purchased at a rate lower than their intrinsic value so that the purchase price on the market is in reality a discount of a so-called "margin of safety." The idea is that the intrinsic value of the stock will be realized through future distributions.

One of the major proponents of value investing is billionaire Warren Buffett whose investment strategy over the past quarter of a century has evolved toward a concentration on what he has described as "finding an outstanding company at a sensible price" as a focus of investment rather than turning to generic companies at lower or bargain prices. Much of the foundation of value investing is based on assumptions and on confidence in market knowledge and analysis.

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