Value investing is an investment technique that includes picking securities that seem to be going for less than their intrinsic or book value.
Value investors a effectively uncover stocks they think the market is undervaluing.
They accept the market overreacts to news both good and bad, leading to stock price movements that do not correlate to a company's long-term fundamentals.
The overreaction offers a chance to benefit by purchasing securities at discounted prices; at a bargain.
Currently Warren Buffett is likely the most renowned value investor, but there are numerous other value investors, that include Buffet's professor and mentor, Benjamin Graham, David Dodd, and Charles Munger etc. .
The fundamental idea driving every-day value investing is clear: If you know the true value of something, you can save a lot of capital when you buy it at a bargain.
Most people would concur that whether you purchase a new television at a bargain, or at the complete retail price, you’re getting the similar television with a similar screen size and visual quality.
Securities work along these lines, which means the company’s share price can change even when the company’s value has continued as before.
Securities, like televisions, experience periods of higher and lower demand resulting in price fluctuations; however that doesn't affect what you’re getting for your money.