The idea of buying dirt-cheap stocks may not appeal to some investors at present. The prospects for many companies are currently challenging in an uncertain economic world, which could lead to disappointing share price performances in the near term.
However, over the long run, their low prices could mean they produce higher returns than more popular assets such as gold. As such, now could be the right time to purchase undervalued stocks, rather than seeking to profit from gold after its recent price rise.
Current price levels
Since nearly all investors would rather buy assets when they trade at low levels, buying dirt-cheap stocks could be a sound long-term strategy. It may enable investors to purchase high-quality businesses while they offer wide margins of safety.
This could lead to impressive returns as the world economy recovers in the coming years, and the stock market gradually returns to previous highs.