Value Investing

Value investing is an investment technique where one buys shares that are believed to be undervalued in the hope that the true (higher) value of the stock will be realized. Value investing requires more of a long term outlook. Someone who believes the market over-reacts to good and bad news might be more prone to value investing. Investors who opt for value investing look for low price-to-earnings ratios and low price-to-book values. Value investing examines the stock’s current market value and the company’s intrinsic value.

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