Week 8: Summaries

Week 8: Summaries

SUMMARY 1

This article deals with the findings of the two famous philosophers Graham and Dodd, who articulated the concept to look for conditions that have a significant margin of safety in relation to their prices. They argued in their assumption that stock price does not reflect everything about the company and the shares can be undervalued. However, this hypothesis is challenged by many writers who are of the opinion that stock markets are efficient, and it depicts every information about the business. Also, the financial advisors are smart enough to predict its price, therefore, its very rare that share prices are undervalued than compared to its fair price. Over the years, this theory is not accepted by many people, though there are investors who have beaten the market.

One of the champions of the stock market, Warren Buffett, supports the views of the above two philosophers and says that value investing is a method which should be followed and also challenged the opponents of this theory by listing the nine (9) successful investment funds. According to Him these respective funds will lead to generate returns above the market index. The conclusion he Buffet made after launching of these investment funds that a person will either accept worth investing at first sight or will never accept it as he quoted “it's likely to continue this way. Ships will sail around the world, but the Flat Earth Society will flourish... and those who read their Graham and Dodd will continue to prosper” (Buffett, 1984). He expressed these ideas in his speech at Columbia Business School, May 17, 1984.

SUMMARY 2

This study opposes the conclusions of many writers who just take single investment characteristics, for example, price to earning ratios, market capitalization, dividend yield and many others) in relation to ...