In the world of investing, many value investors want to buy a stock at below market value and sell at its true value, realizing the difference within a relatively short time frame.
Stocks that are clearly undervalued by Mr. Market and which investors are able to capitalize on in a reasonable time frame are few and far between; however, stocks which have been depressed for a significant amount of time and are trading at substantial discounts often take quarters or years to rebound, some taking the better part of a decade to catch up to global fundamentals which have either lagged expectations or become the victim of pessimistic sentiment among traders who wish to put their money into other investment vehicles to grow their money quicker.
This time gap between investments which may materialize in a relatively short amount of time and the longer-term value rebound plays can be substantial, and I would argue, make the long-term value plays much more lucrative (in the long run, of course) than the short-term buy-and-sell value plays many traders attempt to pull off.
In buying a company based on fundamentals with the thesis that an industry or overall segment will improve over time can take substantially longer, but I would argue could be significantly more profitable, over a time frame of, say, 10 years. As an example of such a play, I would recommend investors take a look at Potash Corporation of Saskatchewan Inc. (TSX:POT), a commodities company in the potash business which has lagged behind its peers due to depressed global potash prices and pessimistic sentiment across the board.
Invest wisely, my friends.
