Sunday, 8 August 2010

Buy shares when the intrinsic value is more than the market price.

It is important to know the intrinsic value of stock, if you wish to make a good catch from the stock market. Intrinsic value is the actual value of stock. Only through research study of a particular stock on the basis of Earning per share and some other related factors reveals the intrinsic value of a share. Investors and stock market gurus develop their own method to calculate the intrinsic value of a share. Watch out the market when the shares are sold on discounted price. When the market value of shares less than the intrinsic value of shares it is the better time to buy the share and you can harvest profit out of the trade.

Just for an example see the formula for calculating Intrinsic value in Warren Buffet ( a famous investment guru) Way

Intrinsic Value = Net present value = Future value divided by the Expected Return on Investment (In No. of years)
So learn and develop a method of finding intrinsic value of shares and make profit from share market.

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  1. [...] of shares, but the EPS itself is not a reliable factor to determine the profitability of shares. Intrinsic value and so many other factors also connected with it. If the Share capital of two companies are $ [...]

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