Warren Buffett has not beaten the market performance for 60 years because he was constantly watching the screens, but one word can change your perspective on investing forever.

That word is "value investing."

The meaning of value investing is to look for a successful business and a strong company, then calculate its fair value based on the profits and cash flows it generates.

Then you buy this company when its valuation is lower than the fair value you previously calculated.

The nice thing about this is that it’s not a secret, but rather mathematical formulas that anyone can do 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 total value of the profits you can earn from the company over its entire stay in the market, then calculate this value in the present.

To apply these formulas to any existing business or publicly traded company, you need to understand these terms:
- Current Value vs Future Value (Current Value vs Future Value)
- Discounted Cash Flow (Discounted Cash Flow)
- Terminal Value (Terminal Value)

This article explains these terms in detail
with practical numerical applications

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