What is Value Investing?
Buying stocks trading below their estimated intrinsic value.
In Depth
Value investing, pioneered by Benjamin Graham and popularized by Warren Buffett, focuses on identifying stocks priced below their intrinsic worth based on fundamentals: cash flow, book value, dividends, earnings power. Value investors typically seek a 'margin of safety' — buying only when the discount to fair value is large enough to absorb estimation error.
Example
If a company is estimated to be worth $100 per share based on discounted cash flow but trades at $70, a value investor sees a 30% margin of safety.