When buying stocks, do you decide based on its price performance or on its value

1. 61

   justmakingmoneyposted 13 years ago

   When buying stocks, do you decide based on its price performance or on its value performance?

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2. 57

   Alternative Primeposted 13 years ago

   I believe "Value" is more important. Value is actually one indicator of a good or bad price for a particular stock. If an issue is trading at say $10 and the WS analyst's estimate fair market value to be $20 then it's probably a good buy unless it has serious fundamental flaws or issues. It's always a good idea to exercise caution and do your own research prior to purchasing any stock.
   
   Alternative Prime

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3. 61

   fxdaddyposted 13 years ago

   I would have to say "value" too.  Many times, once a stock has already moved, it is too late.  Keep in mind that value is a very relative term and there are different kinds of value.  Just my opinion.

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4. 73

   TycoonSamposted 11 years ago

   I trade on price performance.  I like a stock to show sign of strength and be trending up on a daily chart and then a slight pullback before I enter a trade.  But the again, I'm a technical trader.

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5. 40

   clemchambersposted 11 years ago

   Price performance is a very poor guide, it may even be useless. Personally I “like” stocks going up slowly and smoothly over the medium term but by and large the past performance is no guide to tomorrow.
   
   The same is true with value. Cheap value stocks cannot be predicted, only owned. The payoff doesn’t come predictably from one stock, but from a basket and then over time.
   
   Whatever your investment style is, you must apply it to a basket or you will not reap the correct benefits of your investments. Buying value stocks, especially contrarian ones, has a history of success because cheap stocks are normally stocks people do not want to own for narrative reasons not quantitative ones. The market will pay you to put that straight. The market will not pay you to jump on the bandwagon so price performance is a very sketchy reason to buy a stock.

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