..........intrinsic Value Of A Stock.........

Discussion in 'Fundamental Analysis' started by jatayoo, Jul 24, 2007.

  1. jatayoo

    jatayoo Well-Known Member

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    HI EVERYONE
    THINK !![/:rolleyes:SIZE] WHAT IS THE INTRINSIC VALUE OF A STOCK?
    EVERYDAY ANALYSTS ARE UPGRADING THEIR TARGETS,AFTER A FEW DAYS OR WEEKS THEY WILL BE TALKING IN BEARISH TONES.
    .............WELL , Their are many concepts behind the theory that every stock has an intrinsic value or UNDERLYING Value.What is this value and how to be sure about it ?
    .............CONCEPT ONE..Is about Discounted Cash Flow, a atotal of all the cash flows for the entier life of the buisness discounted to the present.This is good academically, maybe some of the Financial astute minds can estimate it, BUT I think that they do not know for sure, or even within 10% of error what it is.The reason is that the rate of growth for the next 10 years can be estimated with a 60:40 probability by an INSIDER who has a lot of info that the retail investor will not have.The Terminal Growth Rate is another estimation or rather assumption that with the best of Insider knowledge may be totally off the mark.
    .... CAN ANYONE TELL ME THE TERMINAL GROWTH RATE OF INFOSYS AFTER 10 YRS???
    .....BENJAMIN GRAHAM gave a formula that i reproduce below for the analysis of everyone and their views.
    BENJAMIN GRAHAM'S FORMULA : Intrinsic Value = Earnings x (8.5 + 2 x Expected Growth)Summary : I - WHAT IS GRAHAM's FORMULA ?A - A FEW IMPLICATIONS OF GRAHAM'S FORMULA1 - Price Earning Ratio (P/E) as a function of future growth (G)2 - Implicit Growth derived from price and earnings.B - HOW TO ESTIMATE LONG TERM GROWTH ?C - COMPARING GRAHAM's FORMULA WITH DISCOUNTED CASH FLOW METHODE - GRAHAM'S FORMULA LIMITATIONSD - BACK TESTING GRAHAM'S FORMULA II - HOW IS GRAHAM's FORMULA APPLIED ON INVESTINVALUE.COM ?I - WHAT IS GRAHAM'S FORMULA ?Benjamin Graham describes a formula he used to value stocks in the 11th chapter of the “Intelligent Investor”.(whole text here) :"Most of the writing of security analysts on formal appraisals relates to the valuation of growth stocks. Our study of the various methods has led us to suggest a foreshortened and quite simple formula for the valuation of growth stocks, which is intended to produce figures fairly close to those resulting from the more refined mathematical calculations. Our formula is : Intrinsic Value = Current Earnings x (8.5 + 2 x Expected Annual Growth Rate)The growth figure should be that expected over the next seven to ten years."Example n1 : A stock is trading at 120$. Its current earnings are 8$ per share. The annual growth rate over the next 7 to 10 years should be around 7%. The Intrinsic Value is = 8 *( 8.5 + 2 * 7) = 180 $. The Margin of Safety is : (180 - 120) / 180 = 33%.Example n2 : the same stock is still trading at 120$, but its earnings are revised to 9$ per share and the annual long term growth rate should now be around 8%. The Intrinsic Value becomes = 9 *( 8.5 + 2 * 8) = 220.5. The Margin of Safety is : (220.5 - 120) / 220.5 = 56%.Example n3 : the same stock is trading at 120$, its earnings are 5.5$ per share, the annual growth rate around 6.5%. The Intrinsic Value is = 5.5 *( 8.5 + 2 * 6.5) = 118. The Margin of Safety is : (118 - 120) / 118 = -1%.A - A FEW IMPLICATIONS OF GRAHAM'S FORMULA1 - Price Earning Ratio (P/E) as a function of future growth (G)If we assume that Intrinsic Value = Price, then Graham's Formula is equivalent to : Price / Earnings = 8.5 + 2 x G.In other words, the P/E for a no-growth company (G = 0) should be around 8.5.2 - Implicit Growth derived from price and earnings.From the fomula above, a P/E can be linked to G this way : G = (P/E - 8.5) / 2.P/E 5 8.5 10 15 20 25 30
    Long term annual GROWTH (in %) -1.75 0 0.75 3.25 5.75 8.25 10.75
    or graphically : Example : If a stock is trading at 100$ and has earnings of 5$, then we have : G = ( P/E - 8.5 ) / 2 = (100/5 - 8.5) / 2 = (20-8.5)/2 = 11.5 / 2 = 5.75%.B - HOW TO ESTIMATE LONG TERM GROWTH ?Estimating long term growth over the next seven to ten years as required by Benjamin Graham is a key point. Unfortunately, what is certain about future growth is that it is unpredictable. Yet, a few techniques are available :- dividing earnings current earnings by earnings ten years ago and assuming that past growth will reflect future.- dividing average earnings on last three years by average 3 years earnings ten years ago- estimating future growth by fundamentals from the balance sheet- linear regression or log-linear regressions : this is the one chosen on Investinvalue.com.- you can also try this one : hereA good study of the different ways of estimating growth (... and much more...) is available on Pr. Aswath Damodaran website : hereC - COMPARING GRAHAM's FORMULA WITH DISCOUNTED CASH FLOW METHOD ?A good website to compare valuation methods is MoneyChimp : hereGRAHAM'S FORMULA / DCF SIMULATOR : With this simulator (click HERE) you can compare the fair value given by a two-stage discounted cash flows model with the fair value of Graham's Formula.D - GRAHAM'S FORMULA LIMITATIONSConcerning Future Growth Rate :Investinvalue.com utilizes a linear regression of past 10 years earnings to determine growth rates : the last ten years may or may not reflect the future growth rate. Competitive landscapes change, capital structures change, and hence earnings growth rates will be affected.Concerning the level of Current E.P.S. :- earnings may be bloated or understated depending on accounting choices.- cyclical businesses in the late stages of an economy will have a very high earnings base that is used as the basis of the valuation.- Balance sheet leverage is also not considered in the valuation.- Businesses that are currently loss-making are worth zero in this analysis.What follows is taken from an excellent blog : http://valuediscipline.blogspot.com/" This raises another important reminder. Valuation is an incredibly imprecise art. In some ways, the development of the spreadsheet was one of the most dangerous inventions of the twentieth century. Extrapolating data into the hereafter without consideration of its reasonableness, without consideration of competitive advantage periods, and without considering something other than linear growth has often provided ridiculous results.Though elegant spreadsheet models may create an illusion of precision, their complexities do not necessarily suggest greater accuracy than the Graham model. I do prefer free cash flow based valuation models but like every model, the valuation is entirely dependent on the input assumptions. Man have I gotten a lot of those wrong over time, but the spreadsheet sure looked impressive.I think the website is definitely worth a look and a spin. You may or may not agree with the valuation it accords your stock, but at least it should make you think about the reasonableness of your assumptions. If it achieves that, it's a great site."E - BACK TESTING GRAHAM'S FORMULAGRAHAM's formula has been applied to S&P500 index since 1940. The datas come from Professor Robert J. Shiller (Yale University).


    II - HOW IS GRAHAM's FORMULA APPLIED ON INVESTINVALUE.COM ?
    1 - Estimating Earnings Long term Growth : the "G" parameterOur estimation of earnings long term growth rate is based on a linear regression of the past ten years earnings per share. For example, consider Citigroup's Historical earnings on this chart.
    The linear regression on the past ten years earnings (orange bars) looks like this (red line) :
    The prospective linear regression for the next year is the red line.Long term growth is estimated by dividing next years earnings (estimated by regression) by current year earnings ; here, long term growth rate estimation is 4.79 / 4.48 - 1 = 6.91%
    2 - Applying GRAHAM's FORMULAIn the example above :Current Earnings Per Share = EPS = 4.48Long Term Growth Rate = G = 6.91Intrinsic Value = V = EPS * (8.5 + 2 * G ) = 4.48 * (8.5 + 2 * 6.91) = 100 dollars.
    LETS HAVE YOUR VALUABLE IDEA'S.
    :eek::eek::eek:
     
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  2. jatayoo

    jatayoo Well-Known Member

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    hi
    I have another very informative and thaught provoking write up that i would like to share with you : --
    For those who follow Berkshire Hathaway (NYSE: BRK.A) and legendary investor Warren Buffett, you know that Buffett was a student of Graham. You also know that Graham penned two very famous investment tomes, Security Analysis (with David Dodd) and The Intelligent Investor. Of the two, The Intelligent Investor is a little easier to digest, but both are must-haves for any investing library.
    In The Intelligent Investor, Graham laid out an equation that was designed to help people value a growth company. The equation goes like this:
    P = ProjEPS * (8.5 + (2*G)) * (4.4/AAA yield)
    Looks scary, but it's not. Let me break it down for you.
    P = the price of the company's stock. This is what the equation will tell you.
    ProjEPS = the projected earnings per share. You're looking for next year's estimated earnings per share. (Get estimates here.)
    8.5
    Graham surmised that a zero growth stock should have a P/E multiple of 8.5. This reflects an average return of 12% per year. For what it's worth, I think this is a little shaky given the wide variety of circumstances leading to a company with zero growth. As you'll see, Graham put some qualifiers on this equation.
    2*G
    G is the long-term projected growth rate of a company's EPS. Graham said that you should be comfortable that the company will grow its earnings at this rate over the next seven to 10 years. Unfortunately, most companies/analysts only give 5-year expected growth rates, so you'll have to use those.
    4.4
    This was Graham's benchmark for a required rate of return to invest, period. He surmised that at a minimum, an investor needed to be compensated for the effects of inflation and a small risk premium above that. You might be tempted to "play around" with the 4.4, but I keep it constant.
    AAA yield
    This is the yield on the AAA corporate bonds. I like to use the 30-year composite yields, but they are difficult to find. Here is a link that's a few weeks dated, but it'll serve for now: http://www.bondresources.com/Corporate/Rates/AAA
    The 30-year yield on AAA corporates is about 6.25%.
    Okay, so what does all this mean and why am I bothering you with it? Last week, I wrote about risk and expected returns. If you remember, we talked about how investing in one asset class (stocks vs. bonds vs. CDs, etc.) requires that you receive a greater rate of return relative to less risky classes. Graham's equation builds in an equity growth premium as well as an interest rate factor. It's not a magic formula that will solve all of your problems, but it does provide a decent data point to consider in our evaluation of a company's stock price. Let's quickly do an example using Pfizer:
    P = 1.59 * (8.5 + (2 * 19.5)) * (4.4/6.25)
    P = 1.59 * (8.5 + (39)) * (.704)
    P = 1.59 * 47.5 * .704
    P = $53.16
    According to this simple equation, Pfizer's value is about $53. The stock currently trades around $42.50. If you were to take this as gospel (and you better not), you might conclude that the stock is about 25% undervalued at current prices.
    Why am I so cautious and advising you against using this as your "magic dust"? Well, it's only one model, it's imperfect, and it doesn't account for a host of other issues a company may deal with. It also doesn't address other kinds of valuations, such as discounted cash flow analysis, among others.
    Graham provided four major caveats to his equation that I should share here. In the book Small Stocks, Big Profits, Dr. Gerald Perritt describes these caveats as follows. In screening stocks, you should:
    1. Eliminate all firms with negative earnings (losses).
    2. Eliminate all firms with debt to total asset ratios greater than 0.60 (i.e., firms with total debt greater than 60% of total assets).
    3. Eliminate all firms with share prices above net working capital per share.
    4. Eliminate all firms with E/P (earnings divided by price) that are less than twice the AAA bond yield.
    Like Dr. Perritt, I have no real issue with the first two screens. The last two are a bit stringent, though, and don't account for various types of industries or future growth in a business. What do you think of them?
    As you can see, while Graham's equation is a decent place to start looking at a business, it's not perfect by any means. My goal with this column, and hopefully all future columns, is to keep the valuation torch (that Mike and Rich have lit in recent months) alive in Rule Maker land. I started today with Graham's equation, but we can't stop there. Discounted cash flow analysis is out there, along with other concepts such as "real options" that we need to consider.
    In the weeks to come, we need to look at each of the companies in the portfolio, decide if they are still Rule Makers, if they still represent compelling value over the long-term, and if not, what our exit strategy needs to be. We also need to start talking about sell strategy for all stocks. When should we sell?
    I challenge each of you to start thinking carefully about these issues and to share your thoughts on our Rule Maker Strategies board. Who wants to run Graham's equation and filter on all of the Maker companies? Who wants to run DCF analyses on the group to see how they compare? What other measures of valuation do YOU think we should be looking at?
    We have lots of work to do, and the volatile market conditions may be presenting "baby and bath water" opportunities for us. Let's get to it!
    David Forrest always shares his doughnuts. To see his holdings, visit his online profile. The Motley Fool is investors writing for investors.
    Posted by editor on 30 January 2004 07:16 PM | TrackBack
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    New world growth stock valuation using Graham's formula

    Valuing the Biggest and the Best
    Benjamin Graham, the father of value investing, left us with a simple equation to help value growth stocks. With some help from an email friend and Burton Malkiel, David Forrest applies some old-school thinking to today's new-world companies. You may be surprised at the results.
    By David Forrest (TMF Bogey)
    January 27, 2004
    One of the big benefits of writing articles for the whole world to see is that sometimes the world is going to write you back. A few weeks ago, I received an email from a nice gentleman who had been searching through the Fool archives and discovered a piece I wrote several years ago about Benjamin Graham's stock valuation formula.
    I encourage you to read the previous article to learn about the component pieces, but as a point of reference, I'll repeat the equation here. I warn you, it won't make much sense without reading the prior article, but here goes:
    Price = ProjEPS * (8.5 + (2*G)) * (4.4/AAA yield)
    In my original article, I wrote that the "4.4" part of the equation represented what Ben Graham required as a rate of return on his money over inflation. My friend, we'll call him "Mr. D," pointed out that I didn't get this quite right. Mr. D tells me that 4.4 was simply the yield on AAA corporate bonds at the time. Further, Mr. D informs me that the last part of the equation (4.4/AAA yield) wasn't part of Graham's original equation at all, but added in later (he thinks by Janet Lowe). Sure enough, he's correct.
    You see, Graham originally believed that a stock with no growth should return 11.76% annually, and trade at a P/E of no more than 8.5. (1/8.5=11.76) He arrived at this figure by looking at historical returns for zero-growth stocks.
    Knowing that the AAA bond yield was 4.4 % at the time of Graham's writing, and knowing that he required an 11.76% return for zero-growth stocks, we can easily calculate the risk premium he demanded in order to invest in stocks at all. In other words, how much extra return did Graham require of a zero-growth stock to make it worth his while, relative to the highest-grade bonds of the day? Just subtract 4.4% from 11.76% and you have your answer: 7.36%. This was the equity risk premium of the day, at least as far as Benjamin Graham was concerned.
    In order to account for changing interest rates, the second part of the equation was later added as a qualifier of sorts. "4.4/AAA corporate bond yield" was introduced to affect the multiplier as bond yields rose above or below the 4.4% of Graham's time.
    Just when I thought I had things squared away, Mr. D threw a monkey wrench in my operation. He suggested that the equity risk premium is no longer the 7.36% that Graham required. A more volatile interest rate environment (at the hands of the Federal Reserve) and a more stable U.S. economy (relative to the 1930s and 1940s) have caused the equity risk premium to shrink quite a bit.
    The somewhat surreal part of my interaction with Mr. D is that, along the way, he forwarded me an email from Princeton professor Burton Malkiel. Of course, Malkiel is the famous author of A Random Walk Down Wall Street, and his Efficient Market Theory is one of the most debated in all of investing.
    Apparently Mr. D dropped his friend Burton a note and asked him what he thought the equity risk premium was these days. Assuming the person truly is Malkiel (I have not authenticated but have no reason to doubt), Dr. Malkiel believes the current equity risk premium is about 3% and nowhere near the 7.36% above AAA bonds that Graham required. Wow. The implications for stock valuation are significant.
    Adding 3% to the current AAA bond yield of 5.4%, we get 8.4%. If it's true -- due to more volatile interest rates and a dominant U.S. economy -- that investors should only require 8.4% instead of 12% for zero-growth stocks, then the 8.5 in our equation now becomes 12. Talk about role reversal!
    Gentle reader, I realize that many of you are about to scratch your eyes out, wondering where the heck I'm going with all of this. Well, all of this mathematical hooey is relevant to you because Ben Graham's formula is a useful tool to help you understand the valuation of your favorite companies. Don't disrespect the numbers, bub, or you'll end up on the wrong side of a bubble bursting. Ya feel me, playah?
    Now that you're equipped with just enough information to shoot yourself in the foot, let's start firing, shall we? I took a look at seven of the most prominent companies of today and ran them through Graham's value equation.
    Microsoft (Nasdaq: MSFT)
    P = $1.27*(12+(2*10))*(4.4/5.4)
    P = $1.27*32*.81
    P = $32.91
    According to Graham's equation, and factoring in Malkiel's suggested equity risk premium, Microsoft should be fairly valued at $32.91. This would indicate that Microsoft is 13.5% undervalued right now.
    General Electric (NYSE: GE)
    P = $1.76*(12+(2*10))*(4.4/5.4)
    P = $1.76*32*.81
    P = $45.61
    With a current price of just $34.14, is GE a steal?
    Intel (Nasdaq: INTC)
    P = $1.47*(12+(2*15))*(4.4/5.4)
    P = $1.47*42*.81
    P = $50.00
    Intel is only trading at $32.43, a full 50% below what this model suggests as its fair value. That said, my concern is that Intel has been wildly inconsistent over the past few years in its financial performance, so trusting future projections from analysts might not be the best idea with this one.
    Amazon.com (Nasdaq: AMZN)
    P = $0.88*(12+(2*30.2))*(4.4/5.4)
    P = $0.88*72.4*.81
    P = $51.60
    With Amazon trading at $57 or so, this model would give it a big thumbs down from a valuation standpoint.
    Yahoo! (Nasdaq: YHOO)
    P = $0.75*(12+(2*35))*(4.4/5.4)
    P = $0.75*82*.81
    P = $49.81
    Oddly enough, this puts Yahoo! at just about the right price, with stubs of the Internet behemoth trading around $48.16 these days. Still, this is another stock with shaky performance these past years, so I'm a little leery of analyst estimates here.
    Coca-Cola (NYSE: KO)
    P = $2.10*(12+(2*10.1))*(4.4/5.4)
    P = $2.10*32.2*.81
    P = $54.77
    Like Yahoo!, shares of Coke are trading very close to Graham's equation for fair value.
    eBay (Nasdaq: EBAY)
    P = $1.44*(12+(2*37.5))*(4.4/5.4)
    P = $1.44*87*.81
    P = $101.47
    Is it possible that David Gardner's pick from The Motley Fool Stock Advisor newsletter, already up 100% since it was recommended, is still 33% undervalued? Shares today are only trading around $68.
    I'll be the first one to tell you that there is no magic bullet or black box in investing. Graham's equation isn't the end-all-be-all, but it's a great beginning for someone who is trying to wrestle with the valuations of the stocks in her portfolio. I encourage you to become more familiar with this equation, re-read my piece from 2001, and start having some fun doing your own math. And, if you have questions or comments about this article, feel free to email me at davidf@fool.com. See you next week. Same Bat time, same Bat channel.
    David Forrest doesn't own any of the stocks discussed in this article but he does like to snack on the Atkins low-carb peanut butter and chocolate wafer candy bars. Only 4 net carbs and they taste great! Who knew?
     
  3. oxusmorouz

    oxusmorouz Well-Known Member

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    Is finding an intrinsic value of a stock restricted to one mathematical formula? :)
     
  4. jatayoo

    jatayoo Well-Known Member

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    HI OXUSMOROUZ.
    INTRINSIC VALUE is a concept that tries to estimate the present value of a stock on the basis of it's EARNING POWER.
    1) EARNING POWER has been visualised as the capacity to generate free cash flows.
    2) IT is also visualised to mean the capacity of a stock to give returns to the shareholder after all capital expenditures have been met with.Here the sum of the Dividends over the life of a buisness is the thing to assess.
    3)REPLACEMENT COST: -- This concept is used to find the return on the investment made if the same buisness is to be set up from scratch.
    4)BENJAMIN GRAHAM :-- His formula is essentially related to the earnings groweth as on date adjusted for INFLATION and LONG TERM BOND RATE.Hence i find it more sensible than other concepts that are esoteric in the sense that they try to estimate the INFINITE YEILD of earnings groweth or Dividends.
    ......... I have tried various other combinations but i allways get a result close to BENJAMIN GRAHAM's formula.
    The "Margin of Safety" is built into it.
    IN ECONOMIC THINKING their are no hard and fast rules---- at least i think so.The concept one follows is a concept that makes sense to him and is rational.One can approach the same problem of INTRINSIC VALUE from the 'Return On Equity" or "Return on capital employed".I AM INTERESTED TO KNOW WHAT WILL BE THE RATE OF GROWTH OF MY MONEY ( SHAREHOLDERS FUNDS) AND AHAT WILL BE THE DISCOUNTED VALUE TODAY.
    THIS IS THE INTRINSIC VALUE AS I UNDERSTAND IT.
    5)$$$$$$$$$$$ The most IMPORTANT thing to realise is that a "VALUE BUY" is not confined to a small company i.e a "Mangoshit" for 5 bucks or a "Flattyre" for 12 bucks.It applies to a "INFOSYS" a "MARUTI" a "ABAN OFFSHORE" just as well
    ************ At the current juncture INFOSYS and MARUTI are out of favour and declining. Would it not be nice to know their intrinsic value so that one can with confidence take a call as close to it or below it if possible???????????
    :D:D:D
     
  5. oxusmorouz

    oxusmorouz Well-Known Member

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    Nice writeup. The question is, what evidence exists that the market "adheres" to this static mathematical derivation?

    Sincerely yours.
     
  6. jatayoo

    jatayoo Well-Known Member

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    HI OXUSMOROUS
    The proof is in eating the pudding.One is assured of handsome profits with minimal downside.Proof lies in the groweth of BERKSHIRE HATHWAY. Proof lies with investors like WARREN BUFFET, who speak the language of INTRINSIC VALUE , but do not reveal it . Neither would i do so if i were in their place.
    Now I have estimated the INTRINSIC VALUE OF HERO HONDA AT Rs 520 over a period of three years. I could give an error margin of 5% over a period of 3 years , which is possible? So i could buy in the range of 500/ 550.This calculation is based on the current EPS and a very modest rate of growth and using GRAHAM's formula.
    Today i shall find the intrinsic value of "Maruti" and "INFOSYS" useing this and other ideas.let's see what comes out.
    At least put the "Garbage In" and see the "Garbage Out".
    HOW ABOUT USEING YOUR COMPUTER SKILLS TO THIS PROBLEM???:D:D:D
     
  7. alpha1

    alpha1 Member

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    So this is a simple method of valuation.

    Nice.
     
  8. oxusmorouz

    oxusmorouz Well-Known Member

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    Aren't examples different than evidence? One can point out a few people who made millions using astrology...but then, can you term astrology as a tool to be used?
    Again, when we take examples of successful people, what happens to those unsuccessful ones who used the same technique and ended up in the pits? Certainly their opinion would serve purpose too, wouldn't it?

    More than the "effectiveness" of these fundamental valuation models (Which is better off when applied to fixed income instruments), the subjectivity which overshadows it (the number of assumptions to be made) and the complexity of defining constraints makes me wonder....is there a more reliable technique available?

    Sincerely yours.
     
  9. jatayoo

    jatayoo Well-Known Member

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    HI
    I do not think that we will ever get a mathematically perfect method for the capital markets ever.If their was one it would have been found out by now.In as much as that the markets are swayed by sentiments,which generally have a sway from one end to the other end of the pendulum, one can only try to MINIMISE THE EFFECT OF SUCH SENTIMENTS.HENCE THE INTRINSIC VALUE CONCEPT-- A TOOL FOR NEGATING THE SENTIMENT FACTOR.
    *Keynes theory of Demand Supply applies today, and probably for all times to come.One has to accept this.
    **What varies is the Impact of the mismatch anticipated.Let's say that Onions are going to be in short supply.Some people will go out to hoard them immediately with the intension to sell when they are dear.Some will stock up for their immediate needs and buy less than the former.Some would have paid no attention to this event.The Intrinsic value has not changed.THIS BEHAVIOUR IS SEEN IN SECURITIES EVERYDAY.( EDUCOMP REFERRS).
    ***Two weeks latter the govt gets it's act together andf arranges for supplies and the PRICE plumets down.Now the PRICE is approaching the INTRINSIC VALUE of the Onions.
    **** THE PEOPLE WHO HELD THE ONIONS AT THE HIGHER PRICES IN COLD STORES HIT A LOSS.THEY ARE THE RETAIL INVESTORS WHO DID NOT HAVE THE INFORMATION THAT THE BIG GUYS HAD.:D
    *****The smart money is smart because it has information and inputs that the outsiders do not have and shall never have at all.All Smart Money is basically INSIDER MONEY.
    ******HENCE THE BEST DEFENCE FOR THE OUTSIDER I.E THE RETAIL iNVESTOR , IS TO HAVE A CLEAR CONCEPT OF INTRINSIC VALUE.
    *******If the outsider does not have this clear he will be allways guessing..... and playing between supports and resistances that the INSIDERS have created in the past.
     
  10. jatayoo

    jatayoo Well-Known Member

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    HI OXY
    DID i HIT the BULL'S EYE with the post above.:confused::eek::D
     

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