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Raymond YUEN
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YUEN is a finance professional with over 20 years practical experience in financial accounting, financial management and investment. He is a freelance trainer and grader. He also holds a PhD(Management) with research interest in market crash and Fractal Theory. He served Qualification Program of... More
  • Distinguish Price And Value. 0 comments
    Mar 24, 2013 1:43 AM

    A lot of people mix up the concepts of price and value. Price is the money we paid for buying something. One the other hand, value is the usefulness of the item to us and how much it is worth.

     

    This is the prime most important concept for investment professionals. The prime most important job of investment managers is to identify investment vehicles that the price is lower than the value. The value of the investment vehicles has a lot of names, such as intrinsic value, fair value, enterprise value, ... And there are ample methods to estimate this value, such as a dividend growth model, PE method, PEG method, CAPE method, free cash flow discount model, economic value added model, cash value added method, Merton model, asset backing method, real options method, …. The list of methods is so long that it is impossible to name all. A lot of great investment cognoscenti know the importance of identifying value for achieving gorgeous performance in investment. Do not let the delusion of price sap our investment performance and scuttle our good future plan.

     

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