How to Say No to Stocks
๐ซ Warren Buffett $BRK.B says that one has to say No almost every investment to be successful.
๐ง Make sure it is in your circle of competence. For example, I say no to most pharmaceutical companies relying on only one drug. You have to understand the patent very well and what the competitors are making before you can invest.
๐ฆ I'll say No to stocks which won't fit my portfolio. I already have JPMorgan Chase $JPM and I don't think I should be buying another bank.
๐ธ If I see a huge market cap for a company and it looks too big, I can say No immediately. For example, the $80 billion valuation on Snowflake $SNOW
๐ You can have a general idea of the valuation of a company just by looking at financial statements without any calculations. For example, you see a bank with a PB ratio of 4 (with normal ROE and ROA). I'll say No to that.
๐งฎ Most of the time, finding the intrinsic value by using the DCF method is to confirm your gut feelings. Finally, take a margin of safety.
Watch the full video on YouTube:
https://www.youtube.com/watch?v=0663FbYiGqE&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=1
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