People own any particular stock at a variety of prices. The ownership value varies extensively and is unique to what each person paid.
For example, many people bought highly priced securities in the current market. These companies may have solid fundamentals. But, if I bought it at $10 and someone else bought it at $420 and its price falls from $430 to $350, I am still ahead by $340 while the other person is under water by $70. It is intrinsically way more valuable to me. An increase of $10 is a 100% return to me, while the same increase is only a 2.3% (10/420) return for the other investor, but they are still underwater by $60.
The inherent and static value of company is the same for both investors. The relationship between owning it at $10 and owning it at $420 makes my relative value in the security much higher and different from the other investor.
While this discussion is very pedantic and academic, the primary point is that paying a very low price relative to value can significantly improve returns. With quality companies, the longer it is owned, such as five years versus ten years, the more valuable the security becomes. Buffett always says that the longer a quality security is owned, the less risky it is. I couldn’t agree more.
Thinking deeply on this subject is something we all should do before deciding to buy our next stock.
"The father of value investing, Benjamin Graham, explained this concept by saying that in the short run, the market is like a voting machine--tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine--assessing the substance of a company. The message is clear: What matters in the long run is a company's actual underlying business performance and not the investing public's fickle opinion about its prospects in the short run."
Be smart, be well-read, be aware and be successful