Not all ‘value’ is value

Just because a share is cheap, doesn’t mean it’s worth buying
VALUE INVESTING involves investing in shares that are trading below their intrinsic value. This disconnect between price and value could have arisen for a range of reasons, ranging from global factors weighing negatively on investor sentiment, to the sector that this share operates in falling out of favour.

The market can often price such short-term headwinds of a business far into the future. As a result, the share price falls and the resultant disconnect in the company’s valuation is then created.

Many investors spot this and take advantage of the good prices on offer, knowing that…