Value Investing Glossary
Plain-language definitions of the terms used throughout value investing, from Graham to Buffett. General education, not investment advice.
- Margin of safety
- The gap between the price paid and a conservative estimate of value, wide enough to absorb errors.
- Intrinsic value
- What a business is worth based on the cash it can produce over its life, independent of its quote.
- Net-net (NCAV)
- A stock priced below its net current asset value: current assets minus all liabilities.
- Book value
- A company's assets minus its liabilities, as carried on the balance sheet.
- Economic moat
- A structural advantage that protects a company's returns from competition over time.
- Return on invested capital
- Operating profit relative to the capital a business uses to generate it.