Stock Market Glossary
Value
Investment style with a focus on inexpensive value stocks.
In brief: Investment style with a focus on inexpensive value stocks.
Meaning in practice
Graham/Buffett value investors buy stocks whose market price is significantly below their estimated intrinsic value. The style has long dry periods, but generates empirical excess returns over very long periods of time.
Context for investors and traders
For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.
How to use this in practice
In practice, the term should be linked to a specific trading plan: entry, exit, position size and costs belong together. In short time frames, spread, slippage and delayed execution can quickly outweigh the theoretical benefit of an observation.
What to keep in mind
Write down which observation confirms or invalidates your assumption before trading. This keeps the term a decision-making tool rather than a retrospective justification for risk already taken.
