Philosopher AI - what is the most important in value investing?

what is the most important in value investing?

I'm guessing that value investing is a process of identifying securities which are undervalued relative to their intrinsic value. So in a sense, such securities already have an element of 'value' built into them.

2 Sep 2020, 04:34

Intrinsic value is a measure of the actual worth of a security, or how much it would be worth if all legal obligations were satisfied and liquidated. So in that sense we can talk about an intrinsic value for almost anything: stocks, bonds, shares in start-ups, art works ...etc.

2 Sep 2020, 04:35

How do we determine a security's intrinsic value? What are the factors we should consider?

2 Sep 2020, 04:35

The fundamental factors are earnings (or cash flow), asset values and capitalisation, which is the market value of the company or security. As for non-fundamental factors, they can vary between industries.

2 Sep 2020, 04:35

When looking at earnings, we need to think about how those earnings are derived: durable competitive advantages, high barriers to entry and future growth prospects.

2 Sep 2020, 04:35

For asset values, we can look at the tangible assets (plant and equipment) and intangible assets (such as R&D), as well as goodwill.

2 Sep 2020, 04:35

You are getting an AI to generate text on different topics.

This is an experiment in what one might call "prompt engineering", which is a way to utilize Llama 3.1 405b, a neural network trained by Meta.

Llama is a language model. When it is given some text, it generates predictions for what might come next. It is remarkably good at adapting to different contexts, as defined by a prompt (in this case, hidden), which sets the scene for what type of text will be generated.

Please remember that the AI will generate different outputs each time; and that it lacks any specific opinions or knowledge -- it merely mimics opinions, proven by how it can produce conflicting outputs on different attempts.

Feel free to share interesting outputs to /r/philosopherAI on Reddit.

by Murat Ayfer