ref:
1) Intrinsic value
This is the actual value of a stock as opposed to its current market price. The intrinsic value is arrived at taking into account current cash flows, estimated future cash flow, growth potential, and competitive positioning that accounts for variables such as brand, trademarks, patents and copyrights.
2) Margin of safety
a margin of safety--paying only Rs 60 for a stock you think is worth Rs 80, for example--you provide for errors in your forecasts and unforeseeable events that may alter the business landscape. By purchasing the stock at Rs 60, it allows you to be wrong by 25% but still achieve a satisfactory result. The Rs 20 difference between estimated fair value and purchase price is what Graham called the margin of safety. Warren Buffett considers this margin-of-safety principle to be the cornerstone of investment success.
3) Moat
An economic moat is a structural business characteristic that allows a firm to generate high returns on capital for an extended period. It acts as a barrier that protects a company from competition.
4) Moat trend
Economic moats aren’t stagnant over time. Rather, competitive dynamics are constantly shifting as technology develops, regulations change, competitors exit or enter a market, companies gain scale, and so on. This is where our moat trend ratings come in.
5) Circle of competence
- http://www.morningstar.in/posts/33122/5-terms-you-must-known-when-analysing-stocks.aspx
- http://www.morningstar.in/posts/25045/5-investment-lessons-from-charlie-munger.aspx
- http://www.morningstar.in/posts/26602/5-ways-to-identify-economic-moats.aspx
1) Intrinsic value
This is the actual value of a stock as opposed to its current market price. The intrinsic value is arrived at taking into account current cash flows, estimated future cash flow, growth potential, and competitive positioning that accounts for variables such as brand, trademarks, patents and copyrights.
a margin of safety--paying only Rs 60 for a stock you think is worth Rs 80, for example--you provide for errors in your forecasts and unforeseeable events that may alter the business landscape. By purchasing the stock at Rs 60, it allows you to be wrong by 25% but still achieve a satisfactory result. The Rs 20 difference between estimated fair value and purchase price is what Graham called the margin of safety. Warren Buffett considers this margin-of-safety principle to be the cornerstone of investment success.
3) Moat
An economic moat is a structural business characteristic that allows a firm to generate high returns on capital for an extended period. It acts as a barrier that protects a company from competition.
4) Moat trend
Economic moats aren’t stagnant over time. Rather, competitive dynamics are constantly shifting as technology develops, regulations change, competitors exit or enter a market, companies gain scale, and so on. This is where our moat trend ratings come in.
5) Circle of competence
Investors should stick to what they know, the temptation to step outside one's circle of competence can be strong. Investors who get outside their circle of competence can easily find themselves in big trouble. Within it, a given investor has expertise and knowledge that gives him or her significant advantage over the market in evaluating an investment.
