Warren Buffett didn't outperform the market for 60 years because he was constantly watching the screen, but because of one word that can change your perspective on investing forever.



That word is "value investing."

Value investing means finding a successful business and a strong company, then calculating its fair value based on the profits and cash flow it generates.

Then, you buy into that company at a moment when its valuation is lower than that previously calculated fair value.

The beauty of this is that it's not a secret; it's a mathematical formula that anyone can perform themselves if they understand Warren Buffett's definition of fair value:

Warren Buffett's definition of fair value: The fair value of a company is the sum of the profits you can earn from the company over its entire lifespan in the market, calculated at its current value.

In order to apply these equations to any existing business or listed company, you need to understand these terms:
- Current Value vs Future Value
- Discounted Cash Flow
- Terminal Value.

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