Just because a company has a bright future, that doesn’t make it a good investment.

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>For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments. -Warren Buffett

Kanolie

**For newer investors who’ve been burned in the last few weeks:** The difference between being an early stage investor in Facebook, Google, TSLA and what most people are putting their $ into now is that the aforementioned companies had enormous moats and little competition in a huge growth field. Essentially, they had a stupid easy path to growth and ***profitability***, and a lot of super easy ways to defend their market position in the 10 years going forward. They also had great valuations, even as they ipo’ed. Now? People are dumping their $ into commodity plays like weed stocks, solar panel companies, and generic companies with “tech” labels slapped onto them to fetch a higher valuation (ex: $LMND, $SOFI). Surely there will be some winners that come out of the recent IPO’s, spacs, and hype stocks, but they will still see a lot of volatility, and there will likely only be a select few that “make it” in the very long run. **Edit to add this:** Just a suggestion: Where there is hype, there are salespeople trying to sell you a product. And yes, stocks count as products, and there is a LOT of people who stand to benefit from selling their product to investors (usually the Chamaths of the world). Also, the more buzzwords you see in a stock, the more likely it is that there is an active effort to sell it to people. That doesn’t 100% make it a bad investment, but at least know when you’re being sold something.

cbus20122

Yes! I remember a passage from Peter Lynch’s One Up On Wall Street… He basically said that in the 70’s, McDonald’s was overvalued, then, a couple of years later, it went to intrinsic value (loosing about 50% of market cap). It was still the same amazing company, it was just thst the price didn’t match the value. He bough McDonald’s once it was at intrinsic value. I always keep this in mind.

nijacha

A good example of this is TAN. Solar industry has exploded since 2008. Yet it was a dogshit investment most of past decade.

OystersClamsCuckolds

I appreciated Tesla up till the split then when it kept going up I stopped believing. I get the Musk memes but thinking that GM/Toyota/Ford/Nissan won’t absolutely flip their whole script if indeed electric cars are worth as much as Tesla indicates is crazy. They will flat out make Teslas with different badges for the kind of money Tesla is worth now.

idledrone6633