A simple approach to the present bear market (fair value, bargains, value traps)

So the stock market has gone down the last few weeks.  You as a value investor is excited, searching for companies to invest for the long term.. 

Here is a very simple way to look at the businesses that are in the stock market:

1.  Those that are still fairly valued, even though the prices are lower than before (FAIR prices).
2.  Those that are under-valued (BIG bargains at present day prices).
3.  Those that are value traps (the values of these companies may go down to zero, therefore these are BAD bargains here;  avoid, avoid and avoid.)

Price is NOT value.   Price is what you pay, value is what you get.

You are looking to buy GREAT COMPANIES AT FAIR OR BARGAIN PRICES.

You are also looking to buy GOOD COMPANIES AT BIG BARGAIN PRICES.

You should avoid buying GRUESOME COMPANIES AT ANY PRICES (VALUE TRAPS).


Wishing you success in your investing.