Many people often mention the word "value" when discussing value investing. But do you really understand what "value" means in the context of value investing?

Honestly, the word "value" is too easily misused. Its meaning varies completely across different scenarios—in business, computer science, engineering, and more. This is also why many novice investors can easily get confused by this concept. Today, I want to clarify the true meaning of "value" in investing to help everyone straighten out their thinking.

First, let's talk about "use value."

As the name suggests, use value is the actual utility of a product or item. But there's a key point—high use value does not necessarily mean high commercial value.

Take air and water, for example. We can't live without air, and we can't go a day without water. By conventional understanding, the use value of air and water is unbeatable. But in reality? Most places supply air for free, and water is easily accessible, with prices ridiculously low.

Conversely, some things are extremely expensive, but you actually don't need them. For example, certain luxury handbags—there's no real difference in use value between a $5 bag and a high-end designer bag; both can carry stuff.

A German professor once said: "Prices fluctuate around value." But I have some doubts—if by "value" he meant use value, then this statement is too absurd. It doesn't align with basic common sense.

From these two examples, we can see that the use value of a product and its commercial value are two different things. One addresses "can it be used," while the other concerns "is it worth money." Understanding this distinction is very helpful when judging the true value of assets in your investments.