Can I Time the Market With Value Investing?
If there's an upside to the rough market investors have had in 2022, it's that lower stock prices make companies' shares more attractive from a value investor's perspective. When all is said and done, stocks are nothing more than partial ownership stakes in businesses. If you recognize that the value of a business is based on the cash it generates over time, you can then use that information to estimate a fair value for the company's stock.
In that framework, the lower a company's stock price is compared to its cash-generating ability, the better the value its shares represent and the more of its shares you might be willing to buy. This is how a down market can be a great opportunity for value investors to swoop in and buy solid businesses for reasonable to even downright cheap prices. The mechanics are clear, but there's still a question on timing: Can I time the market with value investing? Well, the answer to that one is a bit more difficult.
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Source Fool.com
