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Beware of stock market's false bargains

Mar 31, 2022

Redacción Mapfre

Redacción Mapfre

One of Warren Buffett’s most famous quotes (echoing Benjamin Graham) is “Price is what you pay; value is what you get.” For most people it’s difficult to separate a company’s stock’s price from what it is worth. Investors often forget that a stock price simply represents the price that someone is currently willing to pay to purchase shares in a company—and many times, that price is not a reflection of a company’s underlying value.

Jonathan Boyar, CEO at Boyar Value Group, states in an article in Forbes that this concept “is especially important now as there are many companies that have recently lost 30% to 70% of their value.”

This significant “price reduction” does not automatically spell a bargain, as companies whose share prices have collapsed could have just been grossly overvalued to begin with. What’s more, they may still be overvalued. To be successful, Boyar argues that investors “should focus on what a company is worth and pay less attention to short-term share price movements.”

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High volatility in stock markets: why it happens and how to act

High volatility in stock markets: why it happens and how to act

In recent weeks, international markets have faced their most challenging period since 2020. In a situation marked by surging volatility, emotions like fear take center stage in the minds of many investors, and market movements shift from linear to exponential. Such situations, although not frequent, do tend to recur periodically, and it’s important not to get swept up in the negative atmosphere or act impulsively with a short-term mindset, as the experts at MAPFRE remind us.

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The tariff war shakes the global economy and casts doubt on U.S. debt

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The tariffs are a problem that’s marking a major shift in the economic relationships we've built and developed over the past few decades. The U.S. President is using them as a tool to bring manufacturing back home and, in turn, boost government revenue through both direct and indirect taxation. But the ends don't always justify the means, and in pursuing these goals, the U.S. is now facing slower economic growth and rising inflation.

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