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Let say we somehow know that a "fair value" of the business is $100. It's a quality business and all solid, and some master tells us that its fair value is $100 a share.


But it is selling at $200. Then it drops 50% to now $100.


Is it a bargain or are now simply at fair value?


So you'd need to have some good ideas as to how such a business is value by yourself based on your own understanding; also by how the market generally priced this same company (e.g. how many multiples of earnings, say)... then you have to understand the business well enough to see what its future development could foreseeably be.


Then somewhere among those range of values is what you think the fair price is. Compare that to the market price and see if it's a bargain or not.


Note that often, good quality businesses rarely go for fair and reasonable value. It might never be sold at that level. Then again, it might be way, way down below that fair value.


So you got to kind of decide whether fair is reasonable enough; or wait for it to be a seriously real bargain.


To me, SRX at $30 a share is reasonable over the long term (say 7 to 10 years). At $14, forget about it.


But take CSL... it was at something like $130-$150 a share where I kind of guess that around the $100 would be more reasonable. And if I have a whole lot of cash, I'd load up on it and forget about it for a while.


Not having that much cash, I've try to wait until it's very very unreasonable. It might never happen, but then again I might get lucky.


So far though, only a couple of lucky breaks and a couple of major unlucky buys where the Market kind of wait for me to buy then halved the stock just for laughs.


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