What Austrians can teach value investors4 min read . Updated: 10 Jun 2014, 12:55 PM IST
Austrian economics can explain the theory behind value investing rules; like why price gravitates towards value, or why volatility does not define risk
For decades now, value investors have believed the price of a security could deviate considerably from its intrinsic value. This is much in contrast to the practitioners of mainstream finance who assume, as a matter of fact, that prices accurately reflect underlying value at all times. But the theory behind price-value discrepancy has remained unexplained even by value investors, all while many assuming the rules of value investing to be a fact have gone onto make billions.
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