- When values increases while price stays flat - Many value investors take advantage of this opportunity. For example, General Electric has been creating value while its price have fallen from previous high and stagnated. Eventually when companies continue to create value, the market will give them their due.
- Price falls when value stays flat or even increases - Unfortunately, the opportunities are so rare that you have to be there when it happens. In the late 90s and early 2000, Berkshire Hathaway stock price fell by almost half. Why did it fall so drastically? Perhaps many people thought Warren was losing his touch because he is technophobic. Or people thinks Berkshire being a holder of many business is holding some tech stocks too. Berkshire, was however creating value.
- Price rises while value rises even higher - This method can be tough for most traditional value investors.
Wednesday, September 27, 2006
The Buying Opportunities
Here are 3 ways in which value is higher than price and thus, each of this presents an opportunity for an investor to buy.