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value trap
Definition
A stock which may look like a value stock due to a significant drop in price, but which is not actually undervalued. The stock price may have fallen due to its circumstances, and may actually continue to fall. In order to avoid purchasing value traps, investors should study not just the stock price, but also other information about that company.
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Factors to Consider When Deciding to Sell or HoldWeâre looking for businesses whose shares are trading at a 40% or more discount from our assessment of their private market value. To avoid value traps, we focus on companies that have forward expec ... Read more
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