Английский язык. Практический курс для решения бизнес-задач
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6. Is the stock selling at a 25% discount to its real value?
This is the kicker. Finding companies that meet the other five criteria is one thing, but determining whether they are undervalued is the most difficult part of value investing, and Buffett’s most important skill. To check this, an investor must determine the intrinsic value of a company by analyzing a number of business fundamentals, including earnings, revenues and assets. And a company’s intrinsic value is usually higher than its liquidation value.
Once Buffett determines the intrinsic value of the company, he compares it to its current market cap. If his measurement of intrinsic value is at least 25% higher than the company’s market cap, Buffett sees the company as one that has value. Sounds easy, doesn’t it? Well, Buffett’s success depends on his unmatched skill in accurately determining this intrinsic value. While we can outline some of his criteria, we have no way of knowing exactly how he gained such precise mastery of calculating value
Conclusion
Buffett’s investing style, like the shopping style of a bargain hunter, reflects a practical, down-to-earth attitude. Buffett maintains this attitude in other areas of his life: he doesn’t live in a huge house, he doesn’t collect cars and he doesn’t take a limousine to work. The value-investing style is not without its critics, but whether you support Buffett or not, the proof is in the pudding. As of 2004, he holds the title of the second-richest man in the world, with a net worth of more $40 billion (Forbes 2004).
Source: April 22, 2005; investopedia
Essential Vocabulary
1. modern portfolio theory (MPT) –
2. standard deviation – стандартное отклонение
3. mean n – среднее значение, середина
4. inherent a – внутренний, внутренне присущий
5. picking winners – выбор победителей (выбор компаний с большим потенциалом развития как объекта капиталовложений)
6. nest eggs – деньги, откладываемые на «черный» день, для получения дохода после выхода на пенсию или для крупной покупки
7. systematic risk – систематический или рыночный риск
8. unsystematic (specific) risk – несистемный риск
9. covariance n – ковариация
10. efficient frontier – эффективная граница
11. risk-free – безрисковый
12. portfolio management – управление портфелем
13. gilts n, pl (gilt-edged securities) – ценные бумаги «с золотым обрезом» (первоклассные,
14. risk taker – идущий на риск инвестор
15. compound a – начисляемый, кумулятивный, сложный (процент)
16. value investing – инвестиции в акции компаний с высокой дивидендной доходностью и низким отношением цены к прибыли
17.intrinsic a – внутренний
18. efficient market hypothesis (ЕМН) – гипотеза эффективного рынка (гипотеза, по которой при полном доступе рынка к информации цена акции на данный момент является лучшей оценкой будущей цены)
19. return on equity (ROE) – доходность собственного капитала
20. gearing n – отношение заемного капитала к собственному
21. kicker n – «завлекалочка» (дополнительное условие, повышающее привлекательность для инвестора)
22. liquidation value – ликвидационная ценность
Exercise 1. Answer the following questions.
1. What is the essence of the modern portfolio theory? 2. Why is the risk in a portfolio of diverse individual stocks less than the risk of holding a single individual stock? 3. What kinds of risk does MPT identify? 4. What is the efficient frontier? 5. What are the shortcomings of MPT? 6. Does MPT work well in practice? 7. What is Warren Buffet’s investment philosophy? 8. What are the questions that Warren Buffet asks when he evaluates stocks? 9. Can everybody become rich by using his methods?
Exercise 2*. Find terms in the text that match definitions given below and make sentences of your own with each term.
1. interest figured on both the initial principal and the interest earned in prior periods
2. investing in more than one type of asset in order to reduce risk
3. a market in which current market prices impound all available information and are a fair reflection of the true value of a financial asset
4. the use of debt or borrowing to finance investment
5. a measure of return on investment in which investment is defined as the net worth of the firm (profit after taxes divided by net worth)
6. an investor who will pay for the opportunity to gamble
7. the probability-weighted measure of the dispersion of possible outcomes around an expected value; a statistical measure of risk
8. the part of total risk that is related to the general economy or to the stock market as a whole; the risk that cannot be eliminated by diversification