One mistake I used to make in investing was kind of the opposite of this. I would frequently dismiss really good investment opportunities just because the multiples were too high. I'm not saying valuations do not matter, but more often than not, the best companies with great moats, the long term compounding machines, are simply going to look a bit expensive. You're paying a premium for less risk, which I'm now ok with. I finally decided to pull the trigger on MSCI, even though the price/sales looks a bit high.
Great companies often trade at rich valuations. This is why we don't use valuation measures when investing in dividend champions. These are quality companies by definition and we'd rather accumulate using dollar cost averaging consistently over time rather than trying to nail some big discount. It's not often you'll see hype in this space because most are "boring" companies. ;)
For me a simple approach to avoid hitting value traps is to have the standard of investing just in the best companies. Unfortunately, a consequence out of this that you might miss the best deals but on the other hand, you are not doing investments just because of potential low but actually high valuations.
Ugh. Value traps are always so tempting. But of course, time in the market, time in the market, time in the market. The human brain was not designed for the stock market.
Please don't get me going down that rabbit hole ;) I spend lots of time outdoors and really enjoy using backgrounds that are more interesting than the bog standard "shelf of investing books I didn't read" or "three Bloomberg terminals I never use" sort of backgrounds. When I visit more interesting places I may mention where they're at for those that are interested. Joe P.
I’ve thought tiger leaping gorge (hall of fame geography name) would be a cool place to visit. Is it difficult to travel in mainland China? Maybe not so much now, that you’re a resident of Hong Kong?
Traveling in the mainland requires a visa which is easy enough to get. Not too long ago - or maybe it was - they agreed to Americans getting a 10-year visa so that was awfully nice. Still using that to visit. Traveling there is a bit tougher than most countries but that's changing thanks to technology. In Shanghai nobody uses cash anymore. Being a HK citizen doesn't help per se but being close to China makes it quite easy to visit. Joe P.
@@Nanalyze That was an issue here, a year or so ago. WBA has about 1/3 of the shelves empty. While Kroger, Fred meyers, Winco, Target etc operate as if they have a mission to sell things. In other words their shelves are stocked. My main point is there are other ways to see if a business is doing well
@@yourportlandlifestyle2907 Joe P. here. The WBA I frequent which isn't far from Portland actually is stocked. Crime could be one reason yours isn't. I don't know. The USA has a massive crime problem and WBA is in trouble. Both of these things are true. We'll leave it at that.
This is the sort of quality question that keep people coming back. Coolness interviews are conducted every week during Thirsty Thursdays and are invite only. Please contact Gwenylyn in HR for an invite and don't misspell her name because that really hurts her feelings.
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One mistake I used to make in investing was kind of the opposite of this. I would frequently dismiss really good investment opportunities just because the multiples were too high. I'm not saying valuations do not matter, but more often than not, the best companies with great moats, the long term compounding machines, are simply going to look a bit expensive. You're paying a premium for less risk, which I'm now ok with. I finally decided to pull the trigger on MSCI, even though the price/sales looks a bit high.
Great companies often trade at rich valuations. This is why we don't use valuation measures when investing in dividend champions. These are quality companies by definition and we'd rather accumulate using dollar cost averaging consistently over time rather than trying to nail some big discount. It's not often you'll see hype in this space because most are "boring" companies. ;)
For me a simple approach to avoid hitting value traps is to have the standard of investing just in the best companies. Unfortunately, a consequence out of this that you might miss the best deals but on the other hand, you are not doing investments just because of potential low but actually high valuations.
Valuation has never stopped us from buying quality names. Thank you for the comment.
@@Nanalyze Big thanks to you, too.
Ugh. Value traps are always so tempting. But of course, time in the market, time in the market, time in the market.
The human brain was not designed for the stock market.
Behavioral finance is a fascinating topic
This. Beware of crowded trades.
They can't be all good company.
Can you also do a video on how you've been finding cool places to record in lately? I like the nature backgrounds in addition to the content. :)
Please don't get me going down that rabbit hole ;) I spend lots of time outdoors and really enjoy using backgrounds that are more interesting than the bog standard "shelf of investing books I didn't read" or "three Bloomberg terminals I never use" sort of backgrounds. When I visit more interesting places I may mention where they're at for those that are interested. Joe P.
Worst mistake:not to count erosion from inflation with this "high. Divedend" and get hope on growth
The average stock in the Quantigence universe grows its dividend by around 8% handily outpacing inflation.
I’ve thought tiger leaping gorge (hall of fame geography name) would be a cool place to visit. Is it difficult to travel in mainland China? Maybe not so much now, that you’re a resident of Hong Kong?
Traveling in the mainland requires a visa which is easy enough to get. Not too long ago - or maybe it was - they agreed to Americans getting a 10-year visa so that was awfully nice. Still using that to visit. Traveling there is a bit tougher than most countries but that's changing thanks to technology. In Shanghai nobody uses cash anymore. Being a HK citizen doesn't help per se but being close to China makes it quite easy to visit. Joe P.
with WBA~ all you need to do is go into one ~ empty shelves
Not even the poorest countries on this planet have the "grab and dash" retail theft problem that's pervasive in some U.S. states. Mind boggling.
@@Nanalyze That was an issue here, a year or so ago. WBA has about 1/3 of the shelves empty. While Kroger, Fred meyers, Winco, Target etc operate as if they have a mission to sell things. In other words their shelves are stocked. My main point is there are other ways to see if a business is doing well
When you walk into a Walmart and need 7 associates to help you do your shopping because everything is locked down, it's still a massive problem.
@@NanalyzeI can tell from your comments you've now stepped foot into a WBA property. I will leave it at that
@@yourportlandlifestyle2907 Joe P. here. The WBA I frequent which isn't far from Portland actually is stocked. Crime could be one reason yours isn't. I don't know. The USA has a massive crime problem and WBA is in trouble. Both of these things are true. We'll leave it at that.
If I'm cool enough, can I join the discord for free?
This is the sort of quality question that keep people coming back. Coolness interviews are conducted every week during Thirsty Thursdays and are invite only. Please contact Gwenylyn in HR for an invite and don't misspell her name because that really hurts her feelings.