Wealth is like the water in the sea. When the wind blows: the top of the wave is high, just like the stock price is high; at the bottom of the wave, the water level is very low, just like the stock price is very low. When wind stops, the sea level returns to normal, just as the stock returns to its intrinsic value. It also indicates that price is not able to be always high or always low.
The correct strategy is to buy under intrinsic value, i.e. buy at the bottom of a wave. If you buy a stock, your return of investment should contain dividends, company capital growth, and gain due to price fluctuation. If you buy a real estate, the return of investment should contain rent and appreciation.
To differentiate between intrinsic value and market price, besides the analysis of the company or the real estate, the important recommendations: 1)being unemotional about your investments and 2)taking advantage of other people's emotions. As Benjamin Graham said " Be greedy when others are fearful and fearful when other are greedy."
Both of the following books are very good and are highly recommended.
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