Why a stock being “cheap” doesn’t always mean it’s a good deal.
? Price Is Just the Starting Point
But what does that actually mean?
That number is the market price — what people are currently willing to pay. It’s not the same as what the business is worth.
Prices move based on emotion, momentum, headlines, and supply/demand. Value is slower-moving. It’s built on:
Competitive advantages
Market share and durability
? What Creates Real Value
Profits that grow year over year
Customer loyalty or recurring revenue
Smart leadership and capital allocation
?️ Simple Ways to Estimate Value
? Tip: Compare these metrics to competitors in the same industry. Context matters.
❌ Low-priced stocks with no earnings — cheap for a reason
❌ High P/E stocks with hype but no profit — don’t pay a premium for a story that hasn’t delivered
? How to Think Like a Value Investor
Focus on the business, not the chart
Be willing to buy when others are fearful — if the value is there
? Quote to Remember
"In the short run, the market is a voting machine. In the long run, it is a weighing machine." — Benjamin Graham
? Read Next:
➡️ How to Spot a Company Worth Owning for 10+ Years ➡️ How to Know If You're Ready to Pick Stocks ➡️ Building Your First Stock Valuation Checklist (Coming soon)
? Brand Transition Note: Later this year (2025), ForexLive.com is becoming investingLive.com — and we’re here to help you see beyond price, understand business value, and build lasting investing confidence. Stay tuned.
This article was written by Itai Levitan at www.forexlive.com. Read More Details
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