The Business of Value Investing.pdf

The Only Three Types of Investments You Need to Know 31

I would accept it, given the underlying qualities of this business. As

you can see, the scenario in this case is very favorable, even if your

assumptions turn out to be slightly off.

Key Takeaways

• In the short run, stock prices do not have to behave rationally. Don ’ t
  allow short - term market gyrations to cloud your judgment about the quality
  of the business.


• While the majority of professional money managers fail to outperform
  the broad market, numerous investors deliver consistent market - beating
  returns. A common thread is the businesslike orientation of their invest-
  ment selections.


• Remember to view stocks as little pieces of a whole business. Your
  goal is to determine whether that business is undervalued, fairly valued, or
  overvalued.


• The value of most businesses usually is based on several key variables;
  any other information is typically noise and doesn ’ t add signifi cant value.

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