Online Trading Blog

Asset play refers to stocks of companies which have more combined asset than its market capitalization. In short, it is the undervalued stocks in relation to the total asset owned by the company. Trading asset play stocks is a very attractive value investing strategy as traders can profit when the market realizes the true value of the stocks and then the stocks are correctly valued.

The market can have many asset play stocks because of many reasons.

1. The market very often trades on news and technicals rather than fundamentals.
2. The performance of an industry or a sector can affect the total valuation of stocks related to the industry/sector.
3. Often the media ignores some smaller, less popular companies making small profits but have sound fundamentals.

Finding an asset play opportunity can be difficult, investors should be aware of the true asset value of the company and total number of shares outstanding. The asset valuation standards and the asset value itself change from time to time.

Asset play is a risky investment strategy that requires good timing, money management and research. Investing in just any undervalued stocks can be risky, as for profiting the market needs to realize the true value of the stock; and the market can interpret the true value differently from the investor's point of view.

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