Shades of Grey, a Value Investor's Moral Dilemma, and more... - Views on News from Equitymaster

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The Equitymaster Research Digest

Shades of Grey, a Value Investor's Moral Dilemma, and more...
Mar 2, 2016

Why do you invest in stocks?

Silly question, isn't it?

You are in the stock markets to make money...to make BIG money.

If you are a big fan of Warren Buffett like us, your aim would be to pick up quality businesses at a discount...businesses that could compound your wealth year after year.

In other words, we're on the lookout for great businesses that are selling at a discount to their intrinsic value.

Sounds easy, doesn't it?

But the real world is far more complex than that.

If you come over to my desk sometime, you'd find a Charlie Munger quote pinned on the soft board in front of me in big, bold letters:

  • When you locate a bargain, you must ask, 'Why me, God? Why am I the only one who could find this bargain?'

Great businesses seldom sell at a lucrative discount. Businesses that appear to be selling cheap are, at times, value traps.

Some businesses may have an impressive track record. But their future may be bleak. Some businesses that have a troubled past could be on the brink of a turnaround.

Like a pot of gold lying on the table...just waiting for you...it is rare to come across an investment opportunity that is a clear, no-brainer multibagger...

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