Prof John Price taught about Value of Shares on 20 March

Professor John Price from Team Invest  (no commercial affiliation) came from Sydney on Sunday 20 March and taught us several lessons on investing  – finding good quality shares for our self managed super funds (SMSFs).

Valuing a company and it’s shares is often spoken by “gurus”, but what is it? When Warren Buffett, the world’s greatest investor said in the Berkshire Hathaway Owners Manual, “Intrinsic Value is the discounted value of cash that can be taken out of a business during it’s remaining life” – is he saying the discounted method is what he uses?

Professor Price explained that this is one of over 30 methods to value a company (most are explained fully in his book “The Conscious Investor – A Timeless Value Approach” see (no commission involved). He gave examples of several methods and the calculations, then showed one method, and using Woolworths as an example, current share price around $27 we can calculate from a book value of $6.15, with slightly different ROE (return on equity), an Intrinsic value from $10.12 to $188.45. So it’s over value for the first result, and well under valued for the second!

After over 15 years of research and investigation, Professor Price concludes that most valuation methods are “fluffy” for a word. What matters is the Intrinsic Value to YOU.

He gave an example where a loaf of bread to the seller is less valuable than the $2 it sells for, but the bread itself is more valuable to the buyer, enough that he is willing to part with $2 for the bread. And depending on how hungry the person is, the more valuable the bread is too. The bread has more value than the money. No transaction occurs unless there is a difference in the perceived value for both parties.

We look forward to having more teaching from Professor Price at our periodic share investing workshops, and look for more posts coming, on other lessons we learnt that meeting.

Want to know if SMSF is for you and learn simple investment key indicators that can be used in your SMSF? Click the Seminar tab above for the next event.


About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
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