Value Investing

An investing strategy which attempts to invest in stocks that are undervalued. The reasoning goes that as the market is not totally efficient, there may stocks that are potentially undervalued by the market for various reasons (overly pessimistic projections etc). Value investors seek to invest in these stocks and wait for the market to recognize the value of their investments.

Many new investors are drawn to value investing due to the appeal  of  “buy low and sell high”.  However, it is important to differentiate from buying into an undervalued stock and buying into a stock headed for bankruptcy (or that will never recover). See “Value Stock” and “Value Trap” for more.

Related Terms

Popular Articles