Cheap Is a Relative Term

Buying stocks on the cheap is one of those things that everyone preaches about but it is not so easily done. After all, how do you determine if you have bought something at a cheap price? I guess if you buy shares at $20 and sell at $35, then $20 can be deemed a cheap price. Then you again, it could be that you bought at a rich price only to sell off at an even richer price. Or even worse, you buy something truly cheap at $20, it goes to $10 and you sell -- and then it goes up to $30. We've all been there before. 

Cheap, at least to me, is a relative term. It's all about what you are getting for what you buy. Let's look at Blackberry (BBRY), formerly known as Research In Motion. Today the stock trades at $16 but a few months ago the shares were trading below $7. By that metric, it a lot of data points suggested that BBRY was undeniably cheap: Cash per share was around $6 and the stock traded for less than one half of book value. Yet even at $16, shares are not unattractive today: you still have $5.70 per share in cash against book value of $18.15. ...252 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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