In the financial market, prices and movement of prices are signals to investors. A sharp rise in share price indicates an increase in desirability while the converse shows otherwise. However, do all movement in prices necessary reflect the fundamental value of the company?

As value investors, we believe that this is not always the case.

Stock prices in the short run are primarily motivated by the vicissitudes of sentiments in the market. Sometimes investors feel depressed and prices plunge while other times they get optimistic and prices head for the sky.

However, ultimately, prices will revert to the intrinsic value in the long term. No one in the right mind will hold an expensive stock yielding 0.3% return just for its ‘growth’ in the long term (that’s Amazon by the way).

Hence, we strongly suggest for you to ignore stock prices and focus on at least these three fundamentals