My main mistake in the stock market was focusing too much on the numbers and not enough on the business. Even looking at 10 years of history isn't enough. For example, two companies with the same high margins, good ROIC, low debt, the same EPS growth and the same valuation, etc. are going to have two different destinies in the next 10 years. I no longer buy companies where I don't understand the resilience and moat. There are plenty of companies that look very good on a stock screener but turn out to be disappointing in the future because the past was just a good time for them.
Absolutely, there's much more to a business than its numbers: management quality and employees talent, culture, intangibles, industry dynamics, etc. and something that is often hard to quantify and admit: luck.
Not overthinking numbers without disregarding other intagible aspects is key IMO.
Good read, I have had a similar evolution by really starting investing during the strange COVID bubble. Many valuable lessons learned which I hope the insights compound many years into the future. Cheers!
Thanks for sharing, man. The Covid bubble was probably one of the toughest periods in recent market cycles. The 2018 correction (when I started) wasn’t even close.
These experiences should make us stronger, more humble and better investors. No doubt! 😉
My main mistake in the stock market was focusing too much on the numbers and not enough on the business. Even looking at 10 years of history isn't enough. For example, two companies with the same high margins, good ROIC, low debt, the same EPS growth and the same valuation, etc. are going to have two different destinies in the next 10 years. I no longer buy companies where I don't understand the resilience and moat. There are plenty of companies that look very good on a stock screener but turn out to be disappointing in the future because the past was just a good time for them.
Absolutely, there's much more to a business than its numbers: management quality and employees talent, culture, intangibles, industry dynamics, etc. and something that is often hard to quantify and admit: luck.
Not overthinking numbers without disregarding other intagible aspects is key IMO.
Good read, I have had a similar evolution by really starting investing during the strange COVID bubble. Many valuable lessons learned which I hope the insights compound many years into the future. Cheers!
Thanks for sharing, man. The Covid bubble was probably one of the toughest periods in recent market cycles. The 2018 correction (when I started) wasn’t even close.
These experiences should make us stronger, more humble and better investors. No doubt! 😉