Value investing · Course 1 of 39 · Foundations
The value investor's mindset
Price against value, Mr Market, the margin of safety, the circle of competence and temperament: the ideas every later course works from.
This course sets out the discipline every later course in this academy assumes: how to tell a business priced below its worth from one priced correctly because its earnings are about to fall, when the two can carry an identical ratio.
It defines a business's intrinsic value against its daily price, restates Graham's Mr Market so a quote reads as an offer rather than a verdict, sizes the margin of safety a price needs to carry, draws the edge of what you can actually judge, and separates an investment from a speculation by the reasoning behind a purchase rather than by the asset bought. It closes by asking what a price already assumes, the question every later course answers with a different tool.
It contains no conclusions about any company. It assumes only what the course before it covers: what a share is and where a return comes from.
How to read one, not a reading of yours
The value investor's mindset is 7 lessons on where a filed number comes from and what the filer was allowed to choose while producing it. It teaches you to read a statement. It reads none of yours: no company’s accounts are opened anywhere in it.
Related
- Reading financial statements is the next course, on where each figure an estimate of value rests on is found in a filing.
- What a discount rate is doing is the rate every estimate of value in this course is measured against.
- Methodology states every threshold, formula and refusal rule applied to a computed figure.
See our methodology for how the product reads a filing and what it refuses to compute.