Why Do Stocks Get Cheap?
Don't buy if you don't know.
What causes stocks to become cheap?
This is one of the most fascinating questions about the stock market. With literally millions of investors scanning the market for opportunities, a near-instantaneous flow of information, and financial reporting better than ever, how is it that stocks can become mispriced with such regularity? Speaking very generally, it's because investors do not always behave rationally--they have emotions and biases that affect their decisions.
Pat Dorsey does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.