Investors are often advised to follow a 'value investing' strategy. Buy value shares because it delivers better returns over time than growth shares. I've always found this mantra somewhat strange; we are all trying to buy shares for less than they are worth. However, when it comes to being a successful value investor it seems that some people struggle to tell the difference between value and cheap. They rarely equate to the same thing.
Certainly, overpaying for a share leads to disappointing returns, but buying a share just because it has a cheap valuation is no guarantee of future riches. In fact, cheap shares are no different to cheap bottles of wine or cheap cuts of meat. More often than not, the reason they are cheap is because they deserve to be. You are not getting a bargain, you are actually paying a fair price.
Many cheap shares are what are commonly known as 'value traps'. Their cheapness is a reflection of their inferior quality in some way. This is why investors who buy them rarely make any money out of them. They are not buying them for less than they are worth.