Value Investing is a strategy that seeks to invest in stocks that are deemed to be undervalued in price based on fundamental characteristics. Value investing is often contrasted with growth investing, which focuses on emerging companies with high growth prospects.There are a number of reasons why investors may choose to focus on value stocks. Firstly, value stocks tend to be less volatile than growth stocks, meaning they may provide a more stable investment return over time. Secondly, value stocks often have strong fundamentals – such as healthy balance sheets and solid cash flows – which can provide some downside protection during periods of market turmoil.Thirdly, many value investors believe that the market as a whole tends to overreact to both positive and negative news flow in the short term, creating opportunities for those who take a longer-term view. By patiently waiting for these stock prices to rebound back towards their “true” worth, patient value investors can generate significant returns over time.
