A Couple of years earlier in Berkshire Hathway's Annual General Meeting a top executive explained what is "Buying Something" for less than it's worth. In other words, this is what "value investing" means. In a simple language, value investing is buying of shares that look cheap (on some criteria). Some say that value investing is a "misnomer" as no one would buy shares of a company unless such shares offer good value.

Simply put, value investing means (attempting) to buy "something" for less than it is worth. This "something" here is mainly related to stocks and securities. The value of stock is worth the future cash flows (that can be taken out of business) discounted to the present.

In the stock market, good value means buying of shares of companies which have low price earning ratio (P/E), high asset backing, high dividend yield and ideally combination of all the three.

Value investing is buying shares that are fundamentally sound and stable. Due to reasons such as the decline in confidence of the company the shares may be available at a bargain price. Such buying of shares available at a bargain price with the expectation that the shares will recover over time is value investing. The key to value investing is to find bargain shares (priced low for temporary or irrational reasons, underpriced in relation to future of company's potential).

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