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The Nature of ValueHow to Invest in the Adaptive Economy$
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Nick Gogerty

Print publication date: 2014

Print ISBN-13: 9780231162449

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231162449.001.0001

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PRINTED FROM COLUMBIA SCHOLARSHIP ONLINE (www.columbia.universitypressscholarship.com). (c) Copyright University of Minnesota Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CUPSO for personal use.date: 26 September 2021

The Problem with Price? It’s Not Value

The Problem with Price? It’s Not Value

(p.3) Chapter One The Problem with Price? It’s Not Value
The Nature of Value

Nick Gogerty

Columbia University Press

This chapter answers a question that is fundamental to the nature of value theory, that is, why is value important? It shows how value differs from price and explains the dangers this confusion presents to both an investor's portfolio and the health of the economic system as a whole. Price is an overrated metric. In the short term, it is neither predictable nor absolutely linked to value. Price simply reflects opinions of an asset's ability to deliver value in the future. That price is easy to measure and model does not necessarily make it helpful or explanatory in regard to understanding the nature of economic value. Value is complicated, idiosyncratic, and difficult to model, but it is fundamentally important because it is closer to economic truth than is price. Good investing means ignoring opinions and forming one's own understanding of value. Price reflects value over longer periods of time, but in short periods, price reflects many people trying to predict price.

Keywords:   price, value, investment portfolios, investors

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