Hopefully you won't have to find out the hard way that buying a good company for too high a price is still better than buying a poor company - even at what you may think is a bargain price.
No matter how low it may be, a company that doesn't meet the quality requirements will always be too expensive - at any price!
If you are not critical enough about quality, you can easily be seduced into believing that a stock is a bargain when you actually shouldn't touch it with a 10-foot pole.
Here is a statement you may have to think about a little: The worse a company performs, the better a value it will appear to be. Why do you suppose that is?
If you ignore the poor operational performance and just look at the price, you'll be in the market for someone else's mistake!
Sure, you will be able to pick up the stock at bargain-basement prices - but for a good reason.
You will think you made out like a bandit when, in fact, whomever you bought the stock from will turn out to be the lucky one.
The most important point here is that you simply cannot afford to ignore the quality issues or treat them lightly.
Unless the company completely satisfies your quality requirements - and I don't mean it's marginal or might have some problem - your evaluation of the price of the stock can be invalid and, in fact, hazardous to your financial health.
When in doubt, throw it out!
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kcchongnz
"Hopefully you won't have to find out the hard way that buying a good company for too high a price is still better than buying a poor company - even at what you may think is a bargain price."
"No matter how low it may be, a company that doesn't meet the quality requirements will always be too expensive - at any price!"
A new tiny 800cc Myvi cost 10,000. A new 2500cc Honda Accord costs Rm300,000. Which would you buy?
A house with untidy garden, some broken windows, tiles is selling 500k. A nice looking house in the neighborhood, everything in good conditions selling at 1m. Which house would you buy?
2014-01-25 11:49