Value Investing: A Patient Approach to Long-Term Wealth

Stock markets rarely move in a straight line. Prices react to news, rumours, global events, and investor emotions, often swinging sharply in short periods. In such an environment, many investors are tempted to chase momentum or look for quick profits. Value investing takes a different route. It is built on the belief that wealth is created by understanding businesses, not by predicting short-term price movements.

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When Price and Value Don't Match

There are times when good companies fall out of favour. A temporary slowdown, weak quarterly results, or broader market pessimism can drag down share prices, even when the underlying business remains strong. These situations create opportunities for investors who are willing to look beyond headlines.

Value investing focuses on identifying companies whose market prices are lower than what their fundamentals justify. Instead of following trends, investors ask whether the business itself is sound and capable of delivering steady returns over time.

Intrinsic Value

At the heart of value investing is the concept of intrinsic value. This refers to an estimate of what a company is truly worth based on its earnings potential, financial strength, assets, and future prospects. The goal is not to arrive at a precise number, but to develop a reasonable valuation range.