INTERVIEW: Rick Rule on the difference between price and value

From Tekoa Da Silva at Sprott’s Thoughts:

 I had the chance to sit down once again with Rick Rule, CEO of Sprott U.S. Holdings. It was an interesting discussion, as I was able to ask Mr. Rule about a book that in his words, “Absolutely changed my life.” 

In his early years Mr. Rule had the good sense (and fortune) to meet with a legendary value investor, who handed him a copy of “The Intelligent Investor”, written by Ben Graham. 

“I opened the book … [and after 10 pages] … my life was ‘over’,” Mr. Rule admitted. “I didn’t put the book down, [and] read it in one sitting.”

Discussing a few basics from Graham’s work, beginning with ‘price’ and ‘value’, Mr. Rule noted that “Price is what you pay, value is what you get.”

“Making money in investment or speculation,” Mr. Rule explained, “involves exploiting the arbitrage between price and value – buying things at a price … substantially below their value.”

Mr. Rule further discussed the difference between ‘investment’ and ‘speculation’, as well as sharing anecdotes of how value investing can be applied to everyday life, not just financial markets.

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