Price is what you pay, value is what you get from "summary" of The Intelligent Investor, Rev. Ed by Benjamin Graham
In the world of investing, it is crucial to understand the distinction between price and value. Price is simply what you pay for a particular investment, whether it is a stock, bond, or any other asset. On the other hand, value is what you actually receive in return for that price. In other words, price is the amount of money you hand over to purchase an investment, while value is the intrinsic worth of that investment.
Many investors make the mistake of focusing solely on the price of an investment without considering its underlying value. They may be attracted to a stock because it is trading at a low price, assuming that they are getting a good deal. However, if the value of that stock does not align with the price, they may end up overpaying for an investment that is fundamentally weak.
On the flip side, some investors may overlook high-priced investments assuming that they are too expensive. But if the value of those investments justifies the price, they may actually be getting a good deal. It is important to remember that price and value are not always directly correlated. A low price does not necessarily mean a good value, and a high price does not necessarily mean a bad value.
As an intelligent investor, it is essential to analyze the value of an investment before making a purchase. This involves evaluating the financial health of the company, its growth prospects, competitive position, and other relevant factors. By focusing on value rather than price, you can make informed decisions that are likely to yield positive returns in the long run.
In summary, price is what you pay for an investment, while value is what you receive in return. By understanding this distinction and focusing on value rather than price, you can make more rational and profitable investment decisions.
