So now you know the basic idea behind value investing: buy the best companies at low prices. So why would the stocks of the best companies ever trade at low prices? It happens more often than you think. The stock market as a whole, and especially sectors within the market, go through cycles where the P/E ratio rises and falls. When it occurs in the entire market, it might be called a market boom or a recession. When it happens in an individual sector, it could be called a bubble that bursts.
