Intrinsic value

There are securities that aren’t trading at their intrinsic value and if one can identify them they may have an edge. The problem is that the market may not recognize this undervalution anytime soon. So buying undervalued stocks is a waiting game that most traders don’t have the luxury of playing for long. To put it another way, just because an analyst is correct, they market may not recognize it and therefore they may not make money on the information. For example, Julian Robertson ran a huge hedge fund called Tiger funds. He knew tech stocks were overvalued and shorted them accordingly. But the market went the other way and he lost billions and closed the fund. He was right in the long term but he bet short term and couldn’t stand the volatility in between. (just a thought)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s