Prices for stocks can temporarily be pushed around by sentiment, index tracking fund purchases, news and political effects, et cetera, and often the prices on very good and well positioned companies become undervalued as part of larger movements that overlook their inherent value.
These companies are often going to become value stocks that will be picked up by savvy investors and institutions.
Factors that will make their values apparent are their book value (low price-to-book ratio), projected earnings (low price-to-earnings ratio), reduced exposure to sector risks or better positioning than peers given current conditions, other results of deep fundamental analysis, and other more technical valuation computations.
The underpricing of the stock due to some of the factors mentioned above is considered market inefficiency by value investors, but there is inherent pressure on those who are considering this buy to refrain from trusting their analysis, because on a more macro level the market is considered to be basically efficient, with the value pretty well priced-in to the equities in question.
Value investors and value fund managers (or their robot-counterparts) seek out these picks from the noise of the marketplace for long-term plays. The value investing strategy has been purported to give the best returns over the long haul than any other fundamental selection strategy (such as Growth investing), with Warren Buffett being a famous example of someone who considers himself a value investor.
A Traditional IRA holds money tax-deferred until retirement. An IRA is an account with tax-deferred growth of assets
Generally speaking, as long as you or your spouse is earning taxable income, you can contribute money to an IRA
A ticker symbol is an abbreviation used to uniquely identify publicly traded shares of a particular stock or security
CUSIP is basically like a Dewey Decimal number for stocks and U.S./local government bonds. CUSIP stands for Committee...
The Lehman Aggregate Bond Index is a broad bond index, widely considered the best total bond market index to track...
The A-/A3 rating is considered Investment Grade, but it is getting closer to the Junk Bond range
Cash Flow-to-Debt Ratio compares the size of a company’s cash flow from operations to the size of its debt
Market momentum is the tendency of a trend to continue in one direction or another. Various analysis methods and...
Winnings from gambling activity must be reported as income, and they will be subject to different kinds of taxes
The Ascending Triangle pattern has a horizontal top line representing a resistance level, and an upward-sloping bottom