What is value investing?

Value investing is an investment strategy that involves picking stocks that appear to be trading for less than their intrinsic or book value. Value investors actively seek out stocks they think the stock market is underestimating. They believe the market overreacts to good and bad news, resulting in stock price movements that do not correspond to a company's long-term fundamentals. The overreaction offers an opportunity to profit by buying stocks at discounted prices—on sale.

The central premise of value investing is that the stock market does not always reflect the true value of a company. It's possible for a company's stock price to diverge from its intrinsic value, creating an opportunity for investors who can identify the discrepancy. This approach requires patience, as it may take time for the stock's price to align with its intrinsic value.

Remember, value investing doesn't guarantee a quick profit. It's a long-term strategy, and it may take several years for the investment to pay off.