I enrolled in a Masters level subject for Accounting with the intent of gaining some basic understanding of reading financial documents. It was super intense, lots of hours and I still can't grasp the concept. I've just spent less than 15 mins watching your video and it all makes sense. Both your content and delivery is perfect! Thank you for sharing.
Julian B Ho Hey I want to ask you one thing if someone buys that business for $200,000 then in future will they get the $20,000 of the business all by themselves and what does that 10% mean?? And will Nancy also gonna get some of net income even if she sells the business??
@@rohitthapliyal3945 $20k is her net income, Nancy gets a 10% return yearly as the owner. If she sells the business and wants to work for the new owner AND the new owner wishes for her to stay as the sole employee, then it's possible to still get paid as an employee. But her pay is really up to her new boss at that point. So, the net income of the newly acquired company now belongs to the new boss.
@@rohitthapliyal3945 10% is return on investment if market is willing to buy that business at $200,000. Suppose If market is willing to pay $100,000 and net income remains same then the return on investment will be 20%. No Nancy wouldn't get anything if she sells everything. But suppose if she sales 50% of business (share) to someone else and holds 50% of business (share) with her, then she'll receive 50% of the net income.
This is some of the most valuable information that I have ever come across on the internet. I study economics in university and I feel like this video taught me more about the stock market in 14 minutes than I learn in an entire semester. If you don't already sell a product (which I'm sure you do) you should! I would buy it. Subscribed to your newsletter.
I study Business at a university and never understood these concepts as well as I did by watching this video! Great job Preston! Keep up the good work and please share more content if you can. Cheers!
Ak Ash Hey I want to ask you one thing if someone buys that business for $200,000 then in future will they get the $20,000 of the business all by themselves and what does that 10% mean?? And will Nancy also gonna get some of net income even if she sells the business??
Mate you are a legend. Thank you very much for sharing this knowledge in a way the average person can understand, I'm looking forward to delving into the stock market with a bit more confidence.
Hey I want to ask you one thing if someone buys that business for $200,000 then in future will they get the $20,000 of the business all by themselves and what does that 10% mean?? And will Nancy also gonna get some of net income even if she sells the business??
Rohit Thapliyal if Nancy sells the business, she is no longer an owner and she will not a a single dollar from net income. If you sell a business you become a stranger to it. Property is not yours, net income is not yours and debt is also not yours.
Can someone tell me what cite can I use for investing and where can I read those books that you can use to calculate net income, equity and whatever is cash flow?
Mr. Preston Pysh, Take a bow . I have never seen a video explaining this clearly, your examples of a small business to a large business and comparing the same with the actual terminology of the stock market is simply the best way to explain anyone who is interested in stocks. I am fortunate enough to watch this video and probably will share this knowledge to many with the same examples. Thanks a ton Preston
Thank you Preston for all you do. I graduated years ago with a degree in Finance and at that time I didn't take the time to really appreciate what I was learning. Your podcast and lessons are much simpler, easy to digest and listen to. thanks again.
You are such a great teacher! Thank you so much for what you do. Tremendously valuable. So easy to understand. Wow, it is so rare to find that level of pedagogy anywhere
Thank you so much. I have been reading "The Warren Buffet Way" sometimes it was difficult for me to understand since am a non-finance person. But your teaching help me a lot since it's in laymen's term. Appreciate your efforts
I am trying to read Intelligent investor. But it is hard to understand ( for the one who is not having baiscs of stocks). But your explanation is very clear and even a layman can undertstand this. I rarely applaud people :)
I'm trying to read that book and i agree! It is hard to read. I even but the audio version of it! I keep playing it over and over again. Then i cross over to these videos to make sense of it all.
Man I thought it was me. Yeah man this book is kinda hard, at least in the beginning where I’m at. Try Dhando Investor. It’s a bit easier. Also “the Richest man in Babylon” is a great book to get into as well.
Loving these lessons!! You are a great online teacher, your presentation and format is very organized and paced in manageable doses of information for anyone wanting to learn the Buffet way. Thank you times ten.
This is of great value! i come from a background in multimedia and design and i'm so ready to start investing. I have to prepare myself first and your videos are feeding my brain just the knowledge i need! thank you!!
Honestly who needs college when you have this guy posting free videos that I can learn at my own pace and It's on me to learn it because I want to not because I have to... Thank you so much for this it really is so informative and easy to digest to someone who started investing like last month!
I've had the Intelligent Investor book for years and before borrowed it from the library. I started investing in my mid twenties without understanding Buffet's strategy at all. Saving money good. Blowing money bad. Even with that, I earned dividends participating in DRPs, participated in my workplace 401K, purchased bonds, changed my spending habits became a Thrift store and sales only shopper. I accrued a lofty sum in just a couple of years, but lost it all through poor choices. Trying to go back to those habits now 20 years later is tough but necessary. Thanks for helping me to finally understand the content. I feel like I will be successful using a scalpel instead of a shovel.
Wow, You are an amazing teacher. I used to think the income statement is the most important, but after watching the video, I realized how the complete picture turns upside downs after having a look at the balance sheet. Curious to complete the whole series and know more about cash flows.
Ahm, your videos are so valuable! I would really love if there would be quizzes added to each lesson to make sure we really understand the content. Thank you!
7:30 When you say she only payed 2,000 dollars on the ice cream machine, for example, you mean she split up her payments and therefore atm the rest is still a liability? And I didn't understand how land is an asset if you only pay for it. Same goes to when you said about writing a balance sheet on ourselves. You said to write down my house as ab asset but from what I've learned, a house is a liability unless you use it for renting to people... Please explain
These are great videos - thanks! What I find confusing is that regarding start-ups equity is always described as "one’s percentage of ownership interest in a given company.", and not "assets minus liabilities". And what does it has to do with shares?
Amazing brilliant!!! Love from India… I am starting my high school this year and these concepts would help me approach my studies better. I am a musician but also want to focus on stocks and finance to achieve a great financial stability Dear 3 videos so far and would soon explore all your videos
can u say equity is the same as asset? because i think the Unappropriated retained earnings is a different money, an acumulated money from previous profit over the years.
This is fantastic, you are very eloquent and a great teacher-thank you so much for posting! I did have a question, in terms of margin of safety- what would be the recommended margin of safety for one to buy stocks?
+Preston Pysh You are my saviour. Your videos are amazing. I work for GE in UX and in my present project I am dealing with complex financial reports that I do not understand shit. Your videos are helping me understand the logic behind finance and I am getting confidence to go and do my work.
Thanks Preston so in other words its not just the Margin of safety but also Debt/Equity ratio, intrinsic value, P/E ratio etc.. Preston I really enjoy your video's. In fact I actually study them, view them at least 2 to 3 times over. Is there any chance you will come up with a Track 4 advanced video's
The first 4 videos have exponentially increased my financial literacy. This has made sense of all the complicated things I've read the last couple months. Preston, how does this $200,000 valuation relate to the outstanding shares/current market price on the ticker? From what i gather from these videos, that price on the ticker is essentially what the "owners" are selling their business for. So we then need to check the net earnings to determine if the ROI is worth it for you?
It's very simple and nice I loved it,but when we calculate equity we taking book value of asset which is historical cost isn't it wrong to compare it with market value?
Really great series. 5th time watching. Preston, I have 2 questions. Would love you to answer. 1. Why is your intrinsic value estimate based on BV and not earnings? 2. You say in one of your videos that you should look at the future earnings estimate per the analysts, but: A. It seems that they look into the near future and not long term estimates. B. They are so all over the place as far as their estimates and wrong so often. C. Aren't analysts a bit bias since they hold stakes in the same companies they analyze? Would really appreciate your answers.
Hey. I want to thank you for your time and knowledge. Really cleared up some issues I was having. One thing I'm confused about is when looking at a Balance sheet. Should we be looking at the current liability and current and current assets or Total liability and total assets? thanks for your help and hope you're still connnected to this channel. ✌️️
Thanks for the great content. I just have a question regarding Margin of Safety. You explain it's the difference between market price and equity but other sources define it as the difference between market price and intrinsic value. Isn't this more suitable? For example, couldn't there be a business with almost zero equity that's profitable and, when cheap enough, with a high MoS; Or a business with massive equity but, although priced less than equity, with a low MoS because it's simply unprofitable and therefore has little intrinsic value?
Thanks for the video! I got one question. From difference of the market value and the assests/liability = the risk, who is it a risk for? Is it a risk for the buyer to purchase or the amount of money the owner will receive after paying off debts?
ir, I have watched 4 of your videos in this series and agree with your anaylists. however could you and others explain this to me. I did an anaylists on 15 stocks using your P/E and P/BV and risks stats. I then looked at the stock charts for 1 month, 3 month, 1 year and 5 years (past performance) and what I found shocked me. the companys that looked excellent according to your videos and teachings did horribly in their stock, all thier stock went down, and the companys with horrible P/E and P/BV and P/E X p/BV numbers had stock that increased in price 15% + per year over 5 years with some having 15-30% increases over the past 6 months!. WHY is this? how do you explain this? thanks.
the video may be a great introduction for the beginner, but don't rely on the formula, it is some sort of a secret thing that the successful investor never truly shares. get some extra books lad!
Is Equity the money that went back in the business from the earnings via ( whole) company or company assets minus company liabilities and how does it differ from dividends? Thanks.
as i know, a company has 2 ways to use its earnings. the first is investing back to the business activities (expand the company), the second is paying back to the shareholder (it's called dividend). when u take the company assets minus the company liabilities, u 'll know how much money u have(or own) in the company :)
Hey, sorry for late asnwer, but thought I'd answer your question for other people aswell. Equity is basically what's left in the company after all the liabilities have been paid off. Say we have assets worth 30,000$, and we have liabilities worth 23,000$, our equity would be 7,000$, it's the cash that is fully ours (the company's). Now, shareholders can their part of the profit/earnings in the form of dividends, depending on how much stock they own in he company. OR, they can reinvest it in the company by not selling their stock(s), which would put that money into the equity where it'll be retained. Hope that helps.
sorry, u could check 7:24 in the previous lesson. I see that dividend comes from the earnings, not equity. The earnings can be used to increase the equity. My English is not good. So if i'm wrong, plz show me. Thanks so much :D
Thanh hoàng đình Yes, you're right. The owners can take their dividends from the profit/earnings, or reinvest it by not selling the stock, which would put that money into the equity of the company. Wrote the explaination at 2 AM, so my mind wasn't very clear. Edited it so that it's correct.
Exactly what I wanted to ask! After we buy that business from her the loans arent ours and wouldn't count on our liabilities.... So maybe the equity increases
Hi All, this was helpful but what is a businesses value like stated in objective 4? Is there a number or ratio that determines the combination of the 2 elements in objective 4?
What would be great, is it the end of the short series you released say a short step-by-step guide, on what to look for and evaluate; along with the given formulas to use when looking to buy a business/ stock. Other then that, great videos!
How did you develop such a good understanding of value investing? Did you figure it out on your own or did you have a job where you had to know all this stuff? Great presentation by the way!
Thanks Preston these videos are very informative. Have a question. What % margin of safety does Warren Buffet or Benjamin Graham look for before buying or investing ?
Hey, thank you for the great content! A question (to Preston, or anyone who understood it), in this example, is the Margin of Safety now 3.5%? Thanks :)
In this example, the author stresses if book value per share and market value per share has a large difference then it warrants investigating. Particularly if Market value exceeds book value by a margin. The further away you deviate from Book value, the greater the risk.
To my understanding, Ben Graham wouldn't invest in a stock unless it had at least a 50% margin of safety. So does that mean that the intrinsic value was 50% of the market value, or vice versa? In this example: Would the Intrinsic Value be $400,000 (Assuming the business is selling at $200,000) or would it be $100,000? Thanks
Thank you kindly for your videos, you're awesome. If I understand well, the margin of safety is the percentage of the equity based on the market value of the business. Is that right? Thanks again.
Thank you for the video! Have one question - the Net Income - does it include or exclude debt/interest? I thought net income/earning was operating profit minuses debt minuses tax, no?
Net income is the gross amount of profit that is left with you after you have paid all your liabilities including debt and tax! So net income is the pure profit which you can consider reinvesting or just keeping it with u as an owner!
I have a question, so what you're saying is Net Income goes to the business if the owner(s) choose to or they can give it to stockholders, which will then becomes referred to as Earnings, correct?
Quick question - If the difference between book value and current value of the share in market is big then it is risky bet. Did I understood correctly ? Also , it looks to me quite same as P/E ratio with the difference that price is compared to intrinsic value of the company (book value) rather than earning . Did I get correctly or all jumbled up ??
I enrolled in a Masters level subject for Accounting with the intent of gaining some basic understanding of reading financial documents. It was super intense, lots of hours and I still can't grasp the concept. I've just spent less than 15 mins watching your video and it all makes sense. Both your content and delivery is perfect! Thank you for sharing.
Julian B Ho Hey I want to ask you one thing if someone buys that business for $200,000 then in future will they get the $20,000 of the business all by themselves and what does that 10% mean??
And will Nancy also gonna get some of net income even if she sells the business??
@@rohitthapliyal3945 $20k is her net income, Nancy gets a 10% return yearly as the owner. If she sells the business and wants to work for the new owner AND the new owner wishes for her to stay as the sole employee, then it's possible to still get paid as an employee. But her pay is really up to her new boss at that point. So, the net income of the newly acquired company now belongs to the new boss.
@@rohitthapliyal3945 10% is return on investment if market is willing to buy that business at $200,000. Suppose If market is willing to pay $100,000 and net income remains same then the return on investment will be 20%.
No Nancy wouldn't get anything if she sells everything.
But suppose if she sales 50% of business (share) to someone else and holds 50% of business (share) with her, then she'll receive 50% of the net income.
Made in 2012. Still watching in 2018. 3rd time watching. Thanks for the content Preston!
2020
2020 baby
2021
2024!
2024
This is some of the most valuable information that I have ever come across on the internet. I study economics in university and I feel like this video taught me more about the stock market in 14 minutes than I learn in an entire semester. If you don't already sell a product (which I'm sure you do) you should! I would buy it. Subscribed to your newsletter.
I study Business at a university and never understood these concepts as well as I did by watching this video! Great job Preston! Keep up the good work and please share more content if you can.
Cheers!
Ak Ash Hey I want to ask you one thing if someone buys that business for $200,000 then in future will they get the $20,000 of the business all by themselves and what does that 10% mean??
And will Nancy also gonna get some of net income even if she sells the business??
Mate you are a legend. Thank you very much for sharing this knowledge in a way the average person can understand, I'm looking forward to delving into the stock market with a bit more confidence.
I totally agree :D
It's been 3 years since you posted an interest in the stock market. How have you fared so far? Curious.
Hey I want to ask you one thing if someone buys that business for $200,000 then in future will they get the $20,000 of the business all by themselves and what does that 10% mean??
And will Nancy also gonna get some of net income even if she sells the business??
Rohit Thapliyal if Nancy sells the business, she is no longer an owner and she will not a a single dollar from net income. If you sell a business you become a stranger to it. Property is not yours, net income is not yours and debt is also not yours.
Can someone tell me what cite can I use for investing and where can I read those books that you can use to calculate net income, equity and whatever is cash flow?
Mr. Preston Pysh, Take a bow . I have never seen a video explaining this clearly, your examples of a small business to a large business and comparing the same with the actual terminology of the stock market is simply the best way to explain anyone who is interested in stocks. I am fortunate enough to watch this video and probably will share this knowledge to many with the same examples.
Thanks a ton Preston
Thank you Preston for all you do. I graduated years ago with a degree in Finance and at that time I didn't take the time to really appreciate what I was learning. Your podcast and lessons are much simpler, easy to digest and listen to. thanks again.
It's rare to find someone who's explaining in a really simple and clear manner! awesome job friend !
Paedagogical, good pace, good explanation, examples, practice principals. You are basically a teacher. A really good one. Thanks!!
In my years of online research, I have never found such rich, easy to understand information on company valuation. I applaud you @Preston Pysh!
You are such a great teacher! Thank you so much for what you do. Tremendously valuable. So easy to understand. Wow, it is so rare to find that level of pedagogy anywhere
Thank you so much. I have been reading "The Warren Buffet Way" sometimes it was difficult for me to understand since am a non-finance person. But your teaching help me a lot since it's in laymen's term. Appreciate your efforts
I am trying to read Intelligent investor. But it is hard to understand ( for the one who is not having baiscs of stocks). But your explanation is very clear and even a layman can undertstand this. I rarely applaud people :)
I'm trying to read that book and i agree! It is hard to read. I even but the audio version of it! I keep playing it over and over again. Then i cross over to these videos to make sense of it all.
Man I thought it was me. Yeah man this book is kinda hard, at least in the beginning where I’m at. Try Dhando Investor. It’s a bit easier. Also “the Richest man in Babylon” is a great book to get into as well.
This is hands down the best video series!
Loving these lessons!! You are a great online teacher, your presentation and format is very organized and paced in manageable doses of information for anyone wanting to learn the Buffet way. Thank you times ten.
This is so much better than any course I have paid for. That's what I love about TH-cam!
You're a fantastic teacher, thank you for sharing this knowledge for free.
These lessons are so good! Love the summaries at the end and the structure overall!
Thank you Preston, I watched the first 3 videos and they are perfect. I will watch them all and then I will send you again.Thank you again.Nice job!!
This is of great value! i come from a background in multimedia and design and i'm so ready to start investing. I have to prepare myself first and your videos are feeding my brain just the knowledge i need! thank you!!
This lessons are very easy to understand. Thank you for providing this for no cost.
Honestly who needs college when you have this guy posting free videos that I can learn at my own pace and It's on me to learn it because I want to not because I have to... Thank you so much for this it really is so informative and easy to digest to someone who started investing like last month!
Awesome course! I just started watching from lesson 1 and the way you explain everything makes it so easy to understand. Thanks!
I've had the Intelligent Investor book for years and before borrowed it from the library. I started investing in my mid twenties without understanding Buffet's strategy at all. Saving money good. Blowing money bad. Even with that, I earned dividends participating in DRPs, participated in my workplace 401K, purchased bonds, changed my spending habits became a Thrift store and sales only shopper. I accrued a lofty sum in just a couple of years, but lost it all through poor choices.
Trying to go back to those habits now 20 years later is tough but necessary. Thanks for helping me to finally understand the content. I feel like I will be successful using a scalpel instead of a shovel.
Very nicely done, so easy to understand. I'm looking forward to see how nancy gets on in the coming days :)
2019 joining the ride of learning more about stocks great content Preston. Timeless content i would say.
i wish they could teach everything as simply as this
+joy ntuli When I become Rich I will explain it in a way that is easy to understand, i got you.
+joy ntuli There's a saying that goes "if you can't explain it simply, you dont understand it sufficiently". This is a good series...
@@ryantaylor170 did you become rich
I cannot agree enough
Clear, concise teaching. Very well presented. Thanks for your hard work.
All these videos are outstanding expositions of financial and investment principles. You can't go wrong. Great examples!
Wow, You are an amazing teacher. I used to think the income statement is the most important, but after watching the video, I realized how the complete picture turns upside downs after having a look at the balance sheet. Curious to complete the whole series and know more about cash flows.
Thank you very much!!
You are doing a great job explaining something that might be complicated and making it so easy to understand!
Well done!!
Your lectures are great not only for those willing to invest in the stock market but also for those buying a company.
Great job. Thank you!
Ahm, your videos are so valuable! I would really love if there would be quizzes added to each lesson to make sure we really understand the content. Thank you!
You are really good at making complicated things easy to understand. Thank you very much for sharing!
Preston Pysh, thank you so much for sharing this knowledge with us. Im 17 and im looking forward to be the next Warrren Buffet.
How's it going so far
Seriously dude you are the one that has explained these accounting things in the most fantastic way ever!!! :D
Best investment course on the net!
Wow! It's incredible! You made it unbelievably easy to understand. Thank you so much for your effort!
thank you so much for this... I kept getting suggestions to start with the intelligent investor, but so much went over my head. This is so helpful
Wow! Your videos are explained so well!! I am really enjoying them! Thank you so much for taking the time to make them!
Your lecture is very simple to understand and has taught me a lot . thanks
One of the best in the field. Your work is helping me a lot. Thank you. GREAT VALUE!!!
The way you explain the concepts is really good!
7:30 When you say she only payed 2,000 dollars on the ice cream machine, for example, you mean she split up her payments and therefore atm the rest is still a liability? And I didn't understand how land is an asset if you only pay for it. Same goes to when you said about writing a balance sheet on ourselves. You said to write down my house as ab asset but from what I've learned, a house is a liability unless you use it for renting to people...
Please explain
Excellent lesson. The only thing I am missing is the quantitative definition of the margin of safety. Is it equity divided by the market price?
A very lucid tutorial. Incredible work.
These are great videos - thanks! What I find confusing is that regarding start-ups equity is always described as "one’s percentage of ownership interest in a given company.", and not "assets minus liabilities". And what does it has to do with shares?
So glad I found this channel! Great stuff that's explained so simplified and easy! Thanks alot Preston!
Amazing brilliant!!! Love from India… I am starting my high school this year and these concepts would help me approach my studies better.
I am a musician but also want to focus on stocks and finance to achieve a great financial stability
Dear 3 videos so far and would soon explore all your videos
your presentation was very helpful and simple to understand
can u say equity is the same as asset? because i think the Unappropriated retained earnings is a different money, an acumulated money from previous profit over the years.
Awesome! You have put in so much of effort and it has benefited us so much! Thanks Preston for this awesome training. :)
Homie! cheers!
It still is good content in June 2021, Thanks for this Preston !
May God bless you Preston, You are adding value to people's lives, AMEN.
Your way of explaining things is awesome!!!
This is fantastic, you are very eloquent and a great teacher-thank you so much for posting! I did have a question, in terms of margin of safety- what would be the recommended margin of safety for one to buy stocks?
Thanks for sharing knowledge.
What is the good margin of safety percentage ?
nice video. i really love your teaching, respect sir!
+Preston Pysh You are my saviour. Your videos are amazing. I work for GE in UX and in my present project I am dealing with complex financial reports that I do not understand shit. Your videos are helping me understand the logic behind finance and I am getting confidence to go and do my work.
These videos are great! The knowledge shared is incredibly insightful
Does a great job at explaining in simple terms
Very nice videos. Good for buying everything. House, business, instrument etc. etc. Thank you
I love it when he's explain so well to understand it makes want to learn.
Thanks Preston so in other words its not just the Margin of safety but also Debt/Equity ratio, intrinsic value, P/E ratio etc.. Preston I really enjoy your video's. In fact I actually study them, view them at least 2 to 3 times over. Is there any chance you will come up with a Track 4 advanced video's
Thank you for these videos. Very simple and well explained. Perfect for those just getting into the market.
The first 4 videos have exponentially increased my financial literacy. This has made sense of all the complicated things I've read the last couple months.
Preston, how does this $200,000 valuation relate to the outstanding shares/current market price on the ticker? From what i gather from these videos, that price on the ticker is essentially what the "owners" are selling their business for. So we then need to check the net earnings to determine if the ROI is worth it for you?
It's very simple and nice I loved it,but when we calculate equity we taking book value of asset which is historical cost isn't it wrong to compare it with market value?
Really great series.
5th time watching.
Preston,
I have 2 questions. Would love you to answer.
1. Why is your intrinsic value estimate based on BV and not earnings?
2. You say in one of your videos that you should look at the future earnings estimate per the analysts, but:
A. It seems that they look into the near future and not long term estimates.
B. They are so all over the place as far as their estimates and wrong so often.
C. Aren't analysts a bit bias since they hold stakes in the same companies they analyze?
Would really appreciate your answers.
Hey. I want to thank you for your time and knowledge. Really cleared up some issues I was having. One thing I'm confused about is when looking at a Balance sheet. Should we be looking at the current liability and current and current assets or Total liability and total assets? thanks for your help and hope you're still connnected to this channel. ✌️️
Thanks for the great content. I just have a question regarding Margin of Safety. You explain it's the difference between market price and equity but other sources define it as the difference between market price and intrinsic value. Isn't this more suitable? For example, couldn't there be a business with almost zero equity that's profitable and, when cheap enough, with a high MoS; Or a business with massive equity but, although priced less than equity, with a low MoS because it's simply unprofitable and therefore has little intrinsic value?
Amazing man. Thank you so much for providing such great information to help beginners understand.
Many thanks Preston..concepts very clearly crisply explained
Thanks for the video! I got one question. From difference of the market value and the assests/liability = the risk, who is it a risk for? Is it a risk for the buyer to purchase or the amount of money the owner will receive after paying off debts?
Very good way to explaining. Well done. Thank you very much
Thank you so much. You made this so easy and simple to understand. Much appreciated!
ir, I have watched 4 of your videos in this series and agree with your anaylists. however could you and others explain this to me. I did an anaylists on 15 stocks using your P/E and P/BV and risks stats. I then looked at the stock charts for 1 month, 3 month, 1 year and 5 years (past performance) and what I found shocked me. the companys that looked excellent according to your videos and teachings did horribly in their stock, all thier stock went down, and the companys with horrible P/E and P/BV and P/E X p/BV numbers had stock that increased in price 15% + per year over 5 years with some having 15-30% increases over the past 6 months!. WHY is this? how do you explain this? thanks.
the video may be a great introduction for the beginner, but don't rely on the formula, it is some sort of a secret thing that the successful investor never truly shares. get some extra books lad!
+Tung son cao what books do you recommend?
I am really thankful for your lessons, i am learning a lot :)
Thank you very much for teaching this. Very easy to understand everyone who want to start investing must watch this VDO.
I don't know how to thank you for this channel !!
Is Equity the money that went back in the business from the earnings via ( whole) company or company assets minus company liabilities and how does it differ from dividends? Thanks.
as i know, a company has 2 ways to use its earnings. the first is investing back to the business activities (expand the company), the second is paying back to the shareholder (it's called dividend). when u take the company assets minus the company liabilities, u 'll know how much money u have(or own) in the company :)
Hey, sorry for late asnwer, but thought I'd answer your question for other people aswell. Equity is basically what's left in the company after all the liabilities have been paid off. Say we have assets worth 30,000$, and we have liabilities worth 23,000$, our equity would be 7,000$, it's the cash that is fully ours (the company's). Now, shareholders can their part of the profit/earnings in the form of dividends, depending on how much stock they own in he company. OR, they can reinvest it in the company by not selling their stock(s), which would put that money into the equity where it'll be retained. Hope that helps.
sorry, u could check 7:24 in the previous lesson. I see that dividend comes from the earnings, not equity. The earnings can be used to increase the equity. My English is not good. So if i'm wrong, plz show me. Thanks so much :D
Thanh hoàng đình Yes, you're right. The owners can take their dividends from the profit/earnings, or reinvest it by not selling the stock, which would put that money into the equity of the company. Wrote the explaination at 2 AM, so my mind wasn't very clear. Edited it so that it's correct.
That's a nice explanation.
I want to ask something, How about the interest from the loan?
Is that has to include in the operational cost?
Exactly what I wanted to ask! After we buy that business from her the loans arent ours and wouldn't count on our liabilities.... So maybe the equity increases
Hi All,
this was helpful but what is a businesses value like stated in objective 4? Is there a number or ratio that determines the combination of the 2 elements in objective 4?
You are the best. Such clarity. Thank you!
What would be great, is it the end of the short series you released say a short step-by-step guide, on what to look for and evaluate; along with the given formulas to use when looking to buy a business/ stock. Other then that, great videos!
How did you develop such a good understanding of value investing? Did you figure it out on your own or did you have a job where you had to know all this stuff? Great presentation by the way!
Thanks Preston these videos are very informative. Have a question. What % margin of safety does Warren Buffet or Benjamin Graham look for before buying or investing ?
Simply amazing content
Kindly make video on net interest to assets ratio
Hey, thank you for the great content! A question (to Preston, or anyone who understood it), in this example, is the Margin of Safety now 3.5%? Thanks :)
In this example, the author stresses if book value per share and market value per share has a large difference then it warrants investigating. Particularly if Market value exceeds book value by a margin. The further away you deviate from Book value, the greater the risk.
How simple you explain things...Thank you soo much...
To my understanding, Ben Graham wouldn't invest in a stock unless it had at least a 50% margin of safety. So does that mean that the intrinsic value was 50% of the market value, or vice versa? In this example: Would the Intrinsic Value be $400,000 (Assuming the business is selling at $200,000) or would it be $100,000?
Thanks
Where do you get the market price/value if the business is not up for sale! Great lesson!
Excellent thank You
This is truly well explained. Thank you!
Thank you kindly for your videos, you're awesome. If I understand well, the margin of safety is the percentage of the equity based on the market value of the business. Is that right? Thanks again.
How would we calculate the value that we personally think it should be trading for?
Hii, how much should be the margin of safety (equity in % of the market price) for a good business?
Thank you for the video! Have one question - the Net Income - does it include or exclude debt/interest? I thought net income/earning was operating profit minuses debt minuses tax, no?
Net income is the gross amount of profit that is left with you after you have paid all your liabilities including debt and tax! So net income is the pure profit which you can consider reinvesting or just keeping it with u as an owner!
Awesome content, is all of this still relevant today or are there other new factors to consider?
I have a question, so what you're saying is Net Income goes to the business if the owner(s) choose to or they can give it to stockholders, which will then becomes referred to as Earnings, correct?
Quick question - If the difference between book value and current value of the share in market is big then it is risky bet. Did I understood correctly ?
Also , it looks to me quite same as P/E ratio with the difference that price is compared to intrinsic value of the company (book value) rather than earning .
Did I get correctly or all jumbled up ??