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The Most Important ThingUncommon Sense for the Thoughtful Investor$
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Howard Marks

Print publication date: 2011

Print ISBN-13: 9780231153683

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231153683.001.0001

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The Most Important Thing Is … Finding Bargains

The Most Important Thing Is … Finding Bargains

Chapter:
(p.100) 12 The Most Important Thing Is … Finding Bargains
Source:
The Most Important Thing
Author(s):

Howard Marks

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231153683.003.0012

This chapter presents a further requirement for successful investing: finding bargains. The process of intelligently building a portfolio consists of buying the best investments, making room for them by selling lesser ones, and staying clear of the worst. This process consists of a list of potential investments, estimates of their intrinsic value, a sense for how their prices compare with their intrinsic value, and an understanding of the risks involved in each, as well as the effect their inclusion would have on the portfolio being assembled. Sophisticated investors often create a list of investment candidates that meet their minimum criteria, and from those they choose the best bargains. Buying a good one generally means the price is low relative to value, and potential return is high relative to risk. This chapter explains what makes price low relative to value, and return high relative to risk, and where to find underpriced assets.

Keywords:   bargains, portfolio, investment, price, value, risk, return, underpriced assets

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