Intrinsic Value

The common defintion for intrinsic value is the objective value that underlies a financial instrument or asset. This can range from common stock to fixed instruments.While this definition is correct it does not do the definition justice unless one understands its usefulness in the market.

Benjaman Graham emphasizes the idea that Intrinsic Value, while “objective in theory”, serves better as a range in which serves to shed light on the value of a company. No one can find the true value of a company but given a set of techniques, can at least approximate it. This idea is crucial to being a value investor. The role of intrinsic value is not enough unless one understands how to apply it.

In order too apply it, comes the next important financial topic: Margin of Safety.