How Do You Know What You Should Pay for a Stock? | Use Buffett's Intrinsic Value Method
Humphrey Yang Humphrey Yang
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 Published On Jun 14, 2021

Using Warren Buffet's method, by finding the Intrinsic Value of a company and applying a Margin of Safety, we can figure out how much we should pay for a stock. We go through a full guide on how to value a company so that you can do this yourself and figure out when to buy a stock.

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Timestamps:
0:00 - Starting Zone
1:35 - Discounted Cash Flow Simple Example
6:09 - Live Example using Apple Stock
11:38 - Free Resources + Gifts

What is Intrinsic Value?
Intrinsic value is a measure of what an asset is worth. According to Buffett, its calculated using the cash flows of the company discounted to the present.

In financial analysis this term is used in conjunction with the work of identifying, as nearly as possible, the underlying value of a company and its cash flow.

What is the Margin of Safety?
Margin of safety is a principle of investing in which an investor only purchases securities when their market price is significantly below their intrinsic value - about a 30-50% buffer. In other words, when the market price of a security is significantly below your estimate of its intrinsic value, the difference is that margin of safety.

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