5 Ways to Stress-Test a Stock in a Bear Market
An old Warren Buffett saying goes, "Price is what you pay, value is what you get."
The volatile price action of the stock market can lead to fear of missing out on the upside and panic selling on the downside. But in reality, the true value of many companies is much more constant. Even a single quarterly earnings report rarely makes or breaks a company despite potentially sizable moves in the stock price.
In this bear market, there are many stocks that are down 50% or more from their all-time highs. In some cases, stock prices clearly got disconnected from true value, leading to a steep sell-off. But for many other companies, the stock price may be lower for little more than a downturn in the business cycle.
Source Fool.com
