DAMODARAN: Five Cautionary Notes For Every Value Investor

Value investors buy stocks that they consider to be trading at less than intrinsic value. Warren Buffett is a well-known value investor.

However, it can be very unpleasant being a value investor.

Value stocks don't always recover their perceived value in a timely manner. In fact, more often than not, prices will sink further. And the investor inevitably questions whether he made a mistake. After all, it's always possible that the stock will never recover its value.

In a recent blog post, legendary NYU finance professor Aswath Damodaran said that he believes there is now a 90 percent chance Apple is undervalued. He described himself as a "value optimist" on the stock.

But he doesn't expect the stock to just go straight up from here.

For those courageous value investors who are have have decided to "take the leap" on Apple, Damodaran offers five cautionary notes. These notes apply for all value investors.