Extracting Value: Value Investing Resource

Warren Buffet arguably the best investor ever, is still investing in this market so why shouldn’t you.  Sure his company recently had a bad, bad quarter with revenue down something like 75%.  But what does that mean in this market?  Everyone is seeing red ink all over the place.

If you’re like every other value investor out there you might not beleive all that you read in the balance sheets of some companies.  A company today with billions of dollars in asset might get most of those assets wiped away depending on what they are, real estate, inventory that becomes obsolete… And while the risk is always there for those assets to be worth considerably less, the chance that risk is realized has become increasingly higher.

So, for all you value investors out there looking for what the Oracle of Omaha is doing, look no further than their filings with the SEC. Recapped here, Reuters talks about what Berkshire increase and decreased in holdings, not eliminating any, but taking some shares off the table and quintupling others.

The Oracle, in contrast to things Jim Cramer has recently said, is hot on the stock market and believes this is where the best deals are. In a down market. Can you weather the storm with him?

Value Investing isn’t a new concept in the world of investing. I’m guessing people have always been look for value when they buy something. But what I’m talking about, analyzing securities, stocks, ownership in a business, in a way that looks to see if that security is undervalued, is something that two very famous investors started to truly consider back in the early 30’s.

For those of you who don’t know, I’m talking about Benjamin Graham and David Dodd. These two are what some might call the fathers of value investing as we know it today. Their book in 1934 titled, Securities Analysis, is the book that brought the value investing approach to investments into the forefront and sparked careers for people like Warren Buffet. Warren learned directly from Ben Graham.

Benjamin Graham and David Dodd made terms like “intrinsic value” and “margin of safety” fun. These two terms ensure a value investor that he or she will be buying an undervalued security. Their methods, unlike trading, teach investors to buy stocks that for one reason or another are undervalued. They taught that even though a company may be getting pounded by the investment world, it can still be a good buy, just based on the intrinsic value of the company.

Benjamin Graham went on to write another book that provides value investors with one of the best resources on the subject ever written in The Intelligent Investor. A book that gives investors easy to follow rules for finding value in the stock market.

These two investors helped pave the way for value investing and in a market where day trading, options trading, buying and selling on any old blog or news article is the norm, their theories still hold water in any conversation. After the blog storm has settled, everyone will always look to what the actual value of the stock is.