3 Warren Buffett Stocks Trading at Below-Average Valuations Right Now
"What is 'investing' if it is not the act of seeking value at least sufficient to justify the amount paid? Consciously paying more for a stock than its calculated value -- in the hope that it can soon be sold for a still-higher price -- should be labeled speculation." -- Warren Buffett, 1992 letter to shareholders of Berkshire Hathaway
In this short passage, famous investor Warren Buffett distinguishes investors from speculators by saying that investors have a method to calculate the value of a stock. "Investor" is a term I like to use for myself, and I hope you do too.
But calculating a stock's value is a complicated activity full of nuance. And as a younger investor, I wasn't aware of the complexities. I was only aware of one facet: the price-to-earnings (P/E) ratio.
Source Fool.com
