How to Evaluate Investment Opportunities

How to Evaluate Investment Opportunities
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Successful investing boils down to buying assets at a discount to intrinsic value. The greater the discount, the more likely the investment will perform. Benjamin Graham, the father of value investing, called this “margin of safety.” The concept is simple in theory and extremely challenging in practice, with the valuation process anything but straightforward.

As just one participant in the market, here’s how I evaluate a company’s intrinsic value. Owner Earnings = Net Income + Non-Cash Expenses (Depreciation, Amortization, Depletion) + One-Time Charges — (Maintenance Capital Expenditures + Working Capital Needs)

Investors can easily mirror the index’s performance by investing in an S&P 500 Index mutual fund or exchange-traded fund. For an individual’s investment success, when he chooses to enter the market makes a significant difference. The stock market performed very well for an investor who bought stocks between 1950 and 1965, but the market was nothing but a continuous 15-year disappointment for an investor who entered in 1965. The market’s best sustained performance was from 1983 to 2000.

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Profitable Investing Tips

Profitable Investing Tips

ProfitableInvestingTips.com is an informational website for men and women who want to discover trading & investing products and strategies and how to use them.

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