Differentiate between price and value from "summary" of Security Analysis: Fifth Edition by Benjamin Graham,Sidney Cottle,David Le Fevre Dodd,Roger F. Murray,Frank E. Block,Martin L. Leibowitz
Price and value are two fundamental concepts in security analysis that are often misunderstood and wrongly used interchangeably. Price is the amount of money that an investor pays to acquire a security, while value represents the intrinsic worth of the security itself. It is crucial to differentiate between these two concepts in order to make informed investment decisions. The price of a security is determined by the forces of supply and demand in the market. It can fluctuate wildly based on investor sentiment, market conditions, and various other factors. Price is a relative and temporary measure that can be influenced by external events, such as economic news or geopolitical developments. Investors who focus solely on price may fall into the trap of buying or selling securities based on short-term market trends, rather than the underlying value of the assets. On the other hand, value is an objective and long-term measure of the worth of a security. It is based on the underlying financial and operational performance of the company issuing the security. Value reflects the c...
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