The Basics of Value Investing Strategy
Value investing involves buying stocks that are priced below their fair value. The investor’s goal is to hold these assets until the broader investment community realizes their true value. When that happens, the value stock’s price will rise and create gains for the investor.
Stocks can be underappreciated and underpriced for several reasons. The company may be working through a temporary issue that is causing lower sales and earnings, the industry or individual stock may be out of favor with investors, or the overall economy could be down.
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