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Everybody loves value, especially people who invest in the stock market. However, it is important to remember that value stocks are not junk stocks. Just because a stock is cheap does not mean that it has value. Value-based investing is “not shopping the bargain bin for seconds and discontinued models. It is not about buying anything less than $3 per share.”
Investment companies focused on value investing, like Noah Hamman’s AdvisorShares Investments, LLC, and Alex von Furstenberg’s Ranger Global Advisors, LLC, define value-based investing as finding stocks that are not correctly priced or valued in the market and buying them because they are or will be worth more when the market corrects itself. Investors who buy these kinds of stocks are called value investors, the most notable one being Warren Buffett, the “Oracle of Omaha.”
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For value investors, the fundamentals of a business (earnings growth, cash flow, dividends, and book value), are more important than the other factors that influence the company’s stock price. These fundamentals give value stocks their value. When the stock market prices a company’s stocks lower than their obvious value, value investors see it as a perfect time to buy those stocks. Value investors are also the ones most likely to invest long-term on the stocks of a company that has good fundamentals.
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Value-based investing is not easy money, but a lot of people have already made fortunes out of this kind of investing, especially after careful research and planning.
For advice on value-based investing and investing in the stock market, visit this website.
