An asset that is Undervalued is one that has a market price less than its perceived intrinsic value. Buying undervalued stock in order to take advantage of the gap between intrinsic and market value is known as value investing.For the average person, trying to time the stock market is like playing with fire. But for the experienced value investor, it's an opportunity to find companies whose shares are trading at a discount to their true worth.The key to successful value investing is buying shares in good companies that are temporarily out of favour with investors for reasons that have nothing to do with their long-term prospects. By patiently waiting for the share price to recover, the savvy investor can make a tidy profit.
