Editing 1course Stock Market (section)

== Key Principles of Value Investing ==

=== 1. Intrinsic Value ===
Intrinsic value is the true worth of a company based on its fundamentals, such as earnings, dividends, and growth potential. Value investors seek to buy stocks when they are priced below this intrinsic value, providing a margin of safety.

=== Example: If a company’s stock is trading at $50 but its intrinsic value is calculated to be $75, it’s considered undervalued and a potential buy. ===

=== 2. Margin of Safety ===
The margin of safety is the difference between a stock’s intrinsic value and its current market price. A larger margin of safety reduces the risk of loss and increases the potential for profit.

=== Example: Buying a stock at $40 when its intrinsic value is $60 gives you a margin of safety of $20 per share, protecting your investment against market fluctuations. ===

=== 3. Fundamental Analysis ===
Fundamental analysis involves examining a company’s financial statements, management, industry position, and economic factors to determine its intrinsic value. This includes analyzing revenue, earnings, debt levels, and cash flow.

=== Example: Before investing in a company, value investors study its income statement, balance sheet, and cash flow statement to assess its financial health and growth prospects. ===

=== 4. Long-Term Perspective ===
Value investing requires patience. It’s about buying undervalued stocks and holding them for the long term, allowing the market to recognize their true value over time.

=== Example: Warren Buffett held onto his investment in Coca-Cola for decades, benefiting from the company’s consistent growth and increasing value. ===