Value investing follows the principle of buying a stock when the stock price trades below the intrinsic value. Investors who follow this strategy to buy the stock for a long duration because they believe that the markets over-react to good as well as bad news which results in stock price movements which do not align with a company’s long-term fundamentals, hence giving an opportunity to capitalize when the price is deflated.
Warren Buffett is one of the proponents of value investing. This video simplifies some of the tools for finding out whether a stock is a value buy or not.
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