Value Investing Basics
Value investors have a long-term focus. They buy and hold stocks for long periods of time, waiting for the market to correct the price of the stock to match its real value.
Therefore, when considering a particular company the first thing that a value investor does is the examination of the business's fundamentals. If there is nothing wrong which can be attributed to the low price, then the stock is a perfect option for an investment. After the market corrects the price, the value investor is rewarded for his/her patience.
A decrease in the price of a stock may be an indication for a value investment candidate. However, sometimes the market is right when decreasing the price due to problems with the fundamentals of the business. Some of the reasons for the decline may be a fall in the earnings or revenues. Additionally, the industry may have experienced a change, which has affected the product line of the company.
http://www.stock-market-investors.com/stock-strategies-and-systems/value-investing-basics.html
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