We are back and better than ever coming to you to discuss different types of trading, finishing up our discussion on intrinsic value, and a little about what’s happening in the market including Tesla.

In Episode You’ll Learn:

• What is a long trade?
  • A long trade is initiated by buying with the expectation to sell at a higher price in the future and realize a profit. It falls in line with Rule #1 Investing.
• What is a short trade?
  • A short trade is initiated by selling, before buying, with the intent to buy the stock back at a lower price and realize a profit, often known as short selling.
  • Not a good idea because it’s really unpredictable and even if you’re right about the information you can still get crushed by something unexpected.
  • Most companies that get short sold are fads, failures, or frauds (they don’t qualify for Rule #1 Investing).
  • Warren and Charlie don’t short companies.

What is Intrinsic Value?

• The intrinsic value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value.
• Does the price of the stock in the current market matter as much as the price that you find? It does, but it matters the least as opposed to the other factors.