Value Investing News

After our introduction of how to calculate intrinsic value, we learned that we calculate a firm’s intrinsic value by discounting the value of the cash that can be taken out of a business during its remaining life. To do so, we have to calculate the firm’s cash flow or what Warren Buffett calls Owner’s Earnings. Before walking through an example of this, we need to understand the difference between intrinsic value vs. market value (which is the same as intrinsic value vs. market price).

• http://www.valueinvestinghq.com/1025/understanding-intrinsic-value-vs-market-value/ (132)