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Margin Of Safety (financial)
A margin of safety (or safety margin) is the difference between the intrinsic value of a stock and its market price. Another definition: In break-even analysis, from the discipline of accounting, margin of safety is how much output or sales level can fall before a business reaches its break-even point. Break-even point is a no-profit, no-loss scenario. History Benjamin Graham and David Dodd, founders of value investing, coined the term margin of safety in their seminal 1934 book, '' Security Analysis''. The term is also described in Graham's ''The Intelligent Investor''. Graham said that "the margin of safety is always dependent on the price paid". Application to investing Using margin of safety, one should buy a stock when it is worth more than its price in the market. This is the central thesis of value investing philosophy which espouses preservation of capital as its first rule of investing. Benjamin Graham suggested to look at unpopular or neglected companies with low ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Intrinsic Value (finance)
In finance, the intrinsic value of an asset or security is its ''value'' as calculated with regard to an inherent, objective measure. A distinction, is re the asset's ''price'', which is determined ''relative'' to other similar assets. The intrinsic approach to valuation may be somewhat simplified, in that it ignores elements other than the measure in question. Options For an option, the intrinsic value is the absolute value of the difference between the current price (''S'') of the underlying and the strike price (''K'') of the option, to the extent that this is in favor of the option holder. Thus, the option is said to have intrinsic value if the option is in-the-money; when out-of-the-money, its intrinsic value is ''zero''. For an option, then, the intrinsic value is the same as the "immediate value" or the "current value" of the contract, which is the profit that could be gained by exercising the option immediately. Formulaically: :IV_= 0 :IV_=\left \vert S-K ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Price
A price is the (usually not negative) quantity of payment or compensation expected, required, or given by one party to another in return for goods or services. In some situations, especially when the product is a service rather than a physical good, the price for the service may be called something else such as "rent" or "tuition". Prices are influenced by production costs, supply of the desired product, and demand for the product. A price may be determined by a monopolist or may be imposed on the firm by market conditions. Price can be quoted in currency, quantities of goods or vouchers. * In modern economies, prices are generally expressed in units of some form of currency. (More specifically, for raw materials they are expressed as currency per unit weight, e.g. euros per kilogram or Rands per KG.) * Although prices could be quoted as quantities of other goods or services, this sort of barter exchange is rarely seen. Prices are sometimes quoted in terms of vouc ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Break-even (economics)
The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal, i.e. "even". In layman's terms, after all costs are paid for there is neither profit nor loss. In economics specifically, the term has a broader definition; even if there is no net loss or gain, and one has "broken even", opportunity costs have been covered and capital has received the risk-adjusted, expected return. The break-even analysis was developed by Karl Bücher and Johann Friedrich Schär. Overview The break-even point (BEP) or break-even level represents the sales amount—in either unit (quantity) or revenue (sales) terms—that is required to cover total costs, consisting of both fixed and variable costs to the company. Total profit at the break-even point is zero. It is only possible for a firm to pass the break-even point if the dollar value of sales is higher than the variable cost per unit. This means that the sellin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Accounting
Accounting, also known as accountancy, is the process of recording and processing information about economic entity, economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and Regulatory agency, regulators. Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used interchangeably. Accounting can be divided into several fields including financial accounting, management accounting, tax accounting and cost accounting. Financial accounting focuses on the reporting of an organization's financial information, including the preparation of financial statements, to the external users of the information, such as investors, regulators and suppliers. Management accounting focuses on the measurement, analysis and reporting of information for internal use by ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Output (economics)
In economics, output is the quantity and quality of goods or services produced in a given time period, within a given economic network, whether consumed or used for further production. The economic network may be a firm, industry, or nation. The concept of national output is essential in the field of macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output (econ .... It is national output that makes a country rich, not large amounts of money. H.L Ahuja (1978). '' Macro-development economics: an analytical approach''. Definition Output is the result of an economic process that has used inputs to produce a product or service that is available for sale or use somewhere else. ''Net output'', sometimes called ''netput'' is a quantity, in the context of production, that is posi ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Break-even
Break-even (or break even), often abbreviated as B/E in finance (sometimes called point of equilibrium), is the point of balance making neither a Profit (economics), profit nor a loss. It involves a situation when a business makes just enough revenue to cover its total costs. Any number below the break-even point constitutes a loss while any number above it shows a profit. The term originates in finance but the concept has been applied in other fields. In economics In economics and business, specifically cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". A profit or loss has not been made, although opportunity costs have been "paid" and capital has received the risk-adjusted, expected return. In other words, it is the point at which the total revenue of a business exceeds its total costs, and the business begins to create wealth instead of consuming it. It is shown grap ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Benjamin Graham
Benjamin Graham (; Given name, né Grossbaum; May 9, 1894 – September 21, 1976) was a British-born American financial analyst, economist, accountant, investor and professor. He is widely known as the "father of value investing", and wrote two of the discipline's founding texts: Security Analysis (book), ''Security Analysis'' (1934) with David Dodd, and ''The Intelligent Investor'' (1949). His investment philosophy stressed independent thinking, emotional detachment, and careful security analysis, emphasizing the importance of distinguishing the price of a stock from the value of its underlying business. After graduating from Columbia University at age 20, Graham started his career on Wall Street, eventually founding Graham–Newman Corp., a successful mutual fund. He also taught investing for many years at Columbia Business School, where one of his students was Warren Buffett. Graham later taught at the UCLA Anderson School of Management, Anderson School of Management at the Un ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
David Dodd
David LeFevre Dodd (August 23, 1895 – September 18, 1988) was an American educator, financial analyst, author, economist, and investor. In his student years, Dodd was a ''protégé'' and colleague of Benjamin Graham at Columbia Business School. The Wall Street crash of 1929 (Black Tuesday) almost wiped out Graham, who had started teaching the year before at his alma mater, Columbia. The crash inspired Graham to search for a more conservative, safer way to invest. Graham agreed to teach with the stipulation that someone take notes. Dodd, then a young instructor at Columbia, volunteered. Those transcriptions served as the basis for a 1934 book '' Security Analysis'', which galvanized the concept of value investing. It is the longest running investment text ever published. Early life and education In 1916, Dodd graduated from High Street School, a high school in Martinsburg, West Virginia, where his father was the principal. In 1920, he completed his Bachelor of Science, at Un ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Security Analysis (book)
''Security Analysis'' is a book written by Benjamin Graham and David Dodd. Both authors were professors at the Columbia Business School. The book laid the intellectual foundation for value investing. The first edition was published in 1934 at the start of the Great Depression. Graham and Dodd coined the term margin of safety in the book. History ''Security Analysis'' was published by McGraw-Hill, and written by David Dodd and Benjamin Graham in the early 1930s, when both authors taught at Columbia University's business school. Writes ''The New York Times'', "it was intended as a common-sense guide for investors but turned out to be a thick textbook that went through five editions and sold more than 250,000 copies y 1988"Obituary ''David Dodd,'' |
The Intelligent Investor
''The Intelligent Investor'' by Benjamin Graham, first published in 1949, is a widely acclaimed book on value investing. The book provides strategies on how to successfully use value investing in the stock market. Historically, the book has been one of the most popular books on investing and Graham's legacy remains. Background and history ''The Intelligent Investor'' is based on value investing, an investment approach Graham began teaching at Columbia Business School in 1928 and subsequently refined with David Dodd. This sentiment was echoed by other Graham disciples such as Irving Kahn and Walter Schloss. Warren Buffett read the book at age 20 and began using the value investing taught by Graham to build his own investment portfolio. ''The Intelligent Investor'' also marks a significant deviation in stock selection from Graham's earlier works, such as '' Security Analysis''. Which is, instead of extensive analysis on an individual company, just apply simple earning criter ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
Capital Preservation
Capital and its variations may refer to: Common uses * Capital city, a municipality of primary status ** Capital region, a metropolitan region containing the capital ** List of national capitals * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used for further production * Capital (Marxism), a central concept in Marxian critique of political economy * Economic capital * Financial capital, an economic resource measured in terms of money * Capital good * Human capital * Natural capital * Public capital * Social capital Architecture and buildings * Capital (architecture), the topmost member of a column or pilaster * The Capital (building), a commercial building in Mumbai, India * Capital (fortification), a proportion of a bastion Arts, entertainment and media Literature Books * ''Capital'' (novel), by John Lanchester, 2012 * ''Das Kapital'' ('Capital: Critique of Political Economy'), a foundational ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] [Amazon] |
