Intrinsic Value

Contrary to what many people think, intrinsic value is not simply a figure obtained from a magic formula. Rather, it is the result of a set of questions/analyses, reflections and assessments.

What is intrinsic value?

By definition, intrinsic value is the real or “fair” value of a company, calculated from all its fundamentals, both current and future. It is the price the company should have if the market were 100% rational and knew all its secrets. Finding this value is an investor’s main job.

The price of a share is simply the number the market has assigned to it at a given moment, whereas value is its true potential and essence.

For an investor, the goal is not to buy at low prices, but to buy value at a low price.