Sean
Value investing is when you buy stock in firms whose share prices are lower than their fundamentals suggest they should be. Value investing is like purchasing shares currently on sale: When other investors realize what they’re missing out on, they’ll purchase up the stock, the price will go up, and you’ll profit.
A low P/E ratio, or price-to-earnings ratio, relative to other companies in the same industry is one quick indicator that a stock is being undervalued by the market. The P/E ratio is the stock price of a company divided by its earnings per share.
Today’s most well-known value investor is Warren Buffet. He learned this approach to investing from Benjamin Graham, his Columbia University professor, and mentor. After turning a few million dollars into billions in the stock market, Buffet popularized the concept of value investing.
