Warren Buffett & Charlie Munger on Intrinsic Value & How to Calculate It

#finance #valueinvesting #warrenbuffett #charliemunger #stocks #investing In this clip Warren Buffett and Charlie Munger talks about the importance of intrinsic value when investing. This is very important when looking into new investments and stocks for your portfolio. The clip is from the Berkshire Hathaway annual meeting in 2003. Even tho the clip is old it is still gold and highly relevant. Especially for new investors looking to learn investing. Intrinsic value is a philosophical concept wherein the worth of an object or endeavor is derived in and of itself—or, in layman's terms, independently of other extraneous factors. Financial analysts build models to estimate what they consider to be the intrinsic value of a company's stock outside of what its perceived market price may be on any given day. The discrepancy between market price and an analyst's estimated intrinsic value becomes a measure for investing opportunity. Those who consider such models to be reasonably good estimations of intrinsic value and who would take investing action based on those estimations are known as value investors. Some investors may prefer to act on a hunch about the price of a stock without considering its corporate fundamentals. Others may base their purchase on the price action of the stock regardless of whether it is driven by excitement or hype. However, in this article, we will look at another way of figuring out the intrinsic value of a stock, which reduces the subjective perception of a stock's value by analyzing its fundamentals and determining its worth in and of itself (in other words, how it generates cash). Intrinsic value refers to some fundamental, objective value contained in an object, asset, or financial contract. If the market price is below that value it may be a good buy—if above a good sale. When evaluating stocks, there are several methods for arriving at a fair assessment of a share's intrinsic value. Models utilize factors such as dividend streams, discounted cash flows, and residual income. Each model relies crucially on good assumptions. If the assumptions used are inaccurate or erroneous, then the values estimated by the model will deviate from the true intrinsic value. Subscribe to Think invest for content focused on investing, stocks, entrepreneurship, Innovation, bitcoin, etfs, index funds, motivation and passive income. Interviews featuring the best business minds in the world.    / @thinkinvest