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Value Investing
The strategy of selecting stocks that trade for less than
their intrinsic value. Value investors actively seek
stocks of companies with sound financial statements
that they believe the market has undervalued. They
believe the market overreacts to good and bad news,
causing stock price movements that do not correspond
with the company's long-term fundamentals. The
result is an opportunity for value investors to profit by
taking a long position on a deflated price and getting
out when the price is later corrected by the market.
Typically, value investors select stocks with
lower-than-average price-to-book or price-to-earnings
ratios and/or high dividend yields.
The strategy of selecting stocks that trade for less than
their intrinsic value. Value investors actively seek
stocks of companies with sound financial statements
that they believe the market has undervalued. They
believe the market overreacts to good and bad news,
causing stock price movements that do not correspond
with the company's long-term fundamentals. The
result is an opportunity for value investors to profit by
taking a long position on a deflated price and getting
out when the price is later corrected by the market.
Typically, value investors select stocks with
lower-than-average price-to-book or price-to-earnings
ratios and/or high dividend yields.