Markets are efficient, and there's no such thing as a free lunch. Do you believe that? For the most part I do -- but not entirely.
See, the markets aren't always efficient. And while there are no free lunches, there is reduced-price fare.
Finding reduced-priced lunches
Are these reduced-price lunches out there all the time? No. And I don't want to give you the impression that there are lots of them hanging around.
But there are three clues we use to find them at Inside Value. Here they are.
1. Changes in sentiment. When bulls turn to bears, stock prices can fall fast. And when bears turn to bulls, prices can rise fast, too. If you notice sentiment changing from positive to negative, start researching the company. It may be a bargain in the making. SanDisk
2. A setback or short-term, fixable problem. Not every business is going to have things go its way all the time. And when a setback occurs, it's up to analysts to figure out whether the company is permanently damaged. Take TevaPharmaceuticals
3. A variant perception. Bill Miller is definitely not afraid to go against the crowd. Many people, including me, thought Google
The right way to invest
At Inside Value, we believe the right way to invest is to take advantage of mispriced opportunities in the market. And to avoid a value trap, we work to identify a company's competitive advantage and estimate its margin of safety.
We love finding cheap lunches. In fact, I'll share one right now: Dell
So what other opportunities has lead analyst Philip Durell found besides Dell? Come and take a free month-long trial to find out and start investing the right way today.
David Meier is a member of the Motley Fool Inside Value team and does not own shares in any of the companies mentioned. Dell is both an Inside Value and a Stock Advisor recommendation. Amazon.com is a Stock Advisor selection. The Motley Fool has a disclosure policy.