A "value trap" is when a stock is cheap and it trades at a low multiple for an extended time. The stock "traps" attract investors who are looking for a bargain because the shares look inexpensive. The "trap" springs when investors buy into the company at low prices and the stock price never rebounds
Today the market sent shock-waves across the retail sector after Amazon (AMZN) and Whole Foods Market, Inc. (WFM) announced they had entered into a definitive merger agreement under which Amazon will acquire Whole Foods for $42 per share in an all-cash deal valued at $13.7 billion.
One of the biggest lessons in my investing career came about as a result of my financial failures. Having spent two decades as a real estate developer, I became obsessed with leverage and I never truly grasped the distinction between investment and speculation.