Hi,
This is the second book after Rich Dad and Poor Dad, which talks about something very much real about investing. 'Rich Dad and Poor Dad' teaches about the general way of using your money to make it work for you that is to acquire assets, and this book is specifically designed to teach you about investing in the stock market, bonds and funds.
This is the second book after Rich Dad and Poor Dad, which talks about something very much real about investing. 'Rich Dad and Poor Dad' teaches about the general way of using your money to make it work for you that is to acquire assets, and this book is specifically designed to teach you about investing in the stock market, bonds and funds.
(this is the Amazon link to buy this book)
The money invested in the stocks and bonds or funds is not very much different from the money invested in assets, because if you follow the value investing approach given by the Graham in this book, you will understand that it is same as buying the assets. A value investment is done after a thorough analysis of the stock, and then be assured that you will not lose your principal amount, and the price you pay is less than what you will gain from it. Of course, no one can be 100% sure of the future, but with this approach, you can maximise your gains.
The Graham & Newman fund run by the partners earned more than 20% per anum on average and beat the S & P 500 index. The author followed the same approach which he described in the book.
So it is very important to understand the value investing approach. Well, it is based upon a simple mathematical approach to finding the value of the price per share that you pay per unit of earnings of that share. For example, a share is priced at $100, and the net earning per share is $5, then the Price to Earnings Ratio (P/E ratio) would be 100/5 = 20.
As per Graham's approach, this ratio should not exceed 20-25, and if it exceeds, then the stock would be over-priced. If is below it, then it is a good opportunity to buy. So we call those shares a bargain which has a P/E ratio lower than 10. This is a very simple technique of finding the value stocks in the market. Also, give a look to the past record of the company. That is the nutshell summary of the value investing taught in this book. For the in-depth knowledge please buy this book and read it for yourself. You can go to the buy link by clicking here.
Thank you!