20 January 2013

Tangible and Intangible Value in Investment

It is well known that we can categorise assets into tangible and intangible assets. Tangible assets are physical objects that have value. When an object has a value, it can be exchanged for money or other assets directly. For example, the inventories, the land, the properties, the building and the machine of a company are the tangible assets. On the other hand, valuable but invisible objects such as brand, skills, privilege and network are considered as intangible assets.

As a value investor, I have a great interest to 'seek'  a better way to evaluate the ultimate value of a company or business. Previously, I only consider tangible value of a company. Although it helps me to avoid lots of trap and to achieve satisfactory investment return in last few years, I think it is the time for me to move up to the next level.

Recently, an idea of evaluating intangible value of a company appears in my mind. For me, intangible value is much complicated than intangible assets. This is because I believe the market price of a company will eventually match the price that is based on the result of both tangible and intangible values.

So far, I can only figure few examples of intangible values, that are, the willing to pay factor, the perception of public, and the future prospect of a company. These 'values' are intangible and unwritten. Consequently, the huge deviation of them from different investors is expected to be normal. 

After sharing my ambiguous idea about intangible values, hopefully, this idea will be solidified in next couple weeks or months. That's all for today. More fascinating articles and sharing will be updated from time to time in Xaivier Blog. So, you are welcome to subscribe our feed, look at our sitemap or simply visit our Homepage for latest sharing.

Written by: Xaivier Chia

(P/S: The above sharing is solely based on personal insight. Please do not take it seriously. However, your valuable feedback are very welcome.)


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