I want to ask that what are we buying is it the trust that people have that share price of that specific company will increase in future.
If value investing is all about balance sheet then why stock prices ITC is is not increasing too much with time
With my limited knowledge, the reason for me buying a stock is because I want to be a shareholder of a company which is growth oriented and generating adequate cashflows. This is the first parameter, once this is decided, then at what price are you willing to buy this business is the second factor wherein the market price of the company comes in.
Assume for a second, there is a grocery shop below your building which is doing well because of the number of people coming and buying things from there. You then would like to be a partner or a co owner of this grocery. When you have decided on this, will you think that in few years time, the value of the store will increase? I do not think so, what you will be thinking is the kind of profit this grocery shop will be making and the profits that you can take home each year.
This to me is the core fundamental based on which business should be purchased (according to me )i.e investing into the company. As long as there is growth coupled with profits every quarter, this is great, if not keep monitoring it and see where it goes. Market price is important but has no relevance if you are not going to sell the same. Tata Sons owns 70% plus of TCS, do you think they monitor the share price of TCS on a daily basis. It scaled to 4,000 and now back to 3450 plus. In my view they are bothered how to bag the next contract and generate cash to feed the shareholders.
These are my views and suits me fine but this rule might not be applicable to others. Hence as long as the fundamentals of ITC is strong and keeps generating tons of cash and gives out dividends which reduces my average cost of investment - I am quite contended and not bothered about the share price.
Not sure, the above is a satisfactory reply to your query, I am trying to reiterate that it is more important to identify good business than worry too much about stock prices.