It’s value is based on the intrinsic value of that business.
Okay, so. How is the intrinsic value of that business determined? Is there a reliable formula? Do you then have any data to show that the market value actually trends towards the intrinsic value?
How is the intrinsic value of that business determined?
All kinds of ways :). Check our Benjamin Graham's work on this like "Security Analysis". It's based on a combo of expected business profits and the value of all
Remember a stock is a REAL THING. You are an owner when you own stock, even if you're just a trader. You own a piece of that business and its profits, assets, future profits, etc.
Do you then have any data to show that the market value actually trends towards the intrinsic value?
Do you have any data to show that the price of a quarter trends towards 25 cents? Ask Warren Buffett about how he made his money.
In his case, it was very easy because there were a lot of good deals back then. In particular, Buffet would target companies whose market cap was less than the book value. "Market cap" means "how much would it cost to buy all of the stock". "Book value" is how much all their shit is worth (land, factories, equipment). If the book value is let's say $1/share and the stock
It's more complicated than that now, but the "data" is the millions of rent seekers who earn a living in the same manner as Buffet.
Okay, so. How is the intrinsic value of that business determined? Is there a reliable formula? Do you then have any data to show that the market value actually trends towards the intrinsic value?
All kinds of ways :). Check our Benjamin Graham's work on this like "Security Analysis". It's based on a combo of expected business profits and the value of all
Remember a stock is a REAL THING. You are an owner when you own stock, even if you're just a trader. You own a piece of that business and its profits, assets, future profits, etc.
Do you have any data to show that the price of a quarter trends towards 25 cents? Ask Warren Buffett about how he made his money.
In his case, it was very easy because there were a lot of good deals back then. In particular, Buffet would target companies whose market cap was less than the book value. "Market cap" means "how much would it cost to buy all of the stock". "Book value" is how much all their shit is worth (land, factories, equipment). If the book value is let's say $1/share and the stock
It's more complicated than that now, but the "data" is the millions of rent seekers who earn a living in the same manner as Buffet.