How I Took Advantage of Mr. Market’s Overreaction to News

In his classic The Intelligent Investor, Ben Graham named the forces that drive stock market “Mr. Market”. Mr. Market is infamous for his changeable emotions. When he is in good mood, he positively overreacts to news and pushes up stock prices; when he is in a bad temper, the market drops even with good news. … Read more

Patterns of Price/Earnings Ratios among Sectors and Company Sizes

I recently came across an interesting fact in Value Investing: from Graham to Buffett and Beyond about the relationship between the price to earnings ratios (P/E) of small cap companies and the market. According to the authors of the book, “[G]enerally the small caps P/Es are higher, befitting their more realistic prospects for growth. In 1983, . … Read more

What Risk (Volatility) Means to Value Investors

Risk in investment is the likelihood of losing principal, the money you pay for an asset. Hence, correctly understand minimize risk is the priority for regular investors. Even venture capitalists or angel investors who are willing to risk losing everything in their investments carefully managed their risks (namely, an astronomical return that is higher than … Read more