Who's afraid of volatility?
Make value your guide. Price will gravitate towards fair value over time
Add BT as a preferred sourceVOLATILITY, it seems, is back!
It is understandable that as an investor, you may feel unease with the recent market volatility. Human beings generally dislike uncertainty. But in the markets, it is because of volatility that value investors can reap higher-than-market returns.
The price of a business should reflect its economic value, which is either based on the assets it owns, or its earnings capacity and the dividends it is able to pay investors. The process of economic value creation is gradual and incremental. The productive capacity of a company and the market comes from the skills and size of the workforce and the company's (market's) accumulated intellectual and physical capital.
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