Value Investing Law and Legal Definition

Value investing is a strategy of selecting stocks that trade for less than their intrinsic values. The value investors’ focuses on buying stocks that are trading at bargain prices. Then they hold it until they become fully valued. The strategy is based on the reasoning that market overreacts to good and bad news, thereby resulting in stock price movements that do not correspond with the company's long-term fundamentals. The result is an opportunity for value investors to profit by buying when the price is deflated. The biggest hurdle involved in this type of investing is the estimation of intrinsic value of the stock.