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Value Trap - One can speak about a value trap, when the price of the stock is dropping, without causing the stock being under-valued. It may look like a value stock due to this drop in price. The reason for such a drop in the stock price can be various, due to circumstances (like an economical crisis for example), but also other circumstances may cause such a drop. Investors are advised to study the company and its finances, not only the price of stock but as well other important information in order to prevent a purchase of a value trap.
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