I love talking about valuation and teaching its importance to investors, especially young investors. True value investing requires patience, and that is a commodity that is in very short supply in most young people. Perhaps even more importantly, it is also very short supply in most investors young and old alike. This becomes most evident when stock prices are moving against the investor, even though the fundamentals of the business remain strong. Even though fundamentals are more important, and more predictable, investors tend to trust pathologically lying stock prices more.
With this video I am going to cover several examples of how valuation truly represents opportunity rather than risk. I believe investors need to recondition themselves in to believing that a falling stock price is a good stock price, and not the other way around. Rising stock prices make you feel good, at least in the short run. Rising stock prices can be like a drug that numbs you to reality until reality rears its ugly and vicious head. Trust fundamentals more than stock prices, and exercise the patience to stay the course when good businesses go on sale.
In this video I will cover Affiliated Managers Group (AMG), FedEx (FDX), CVS Health (CVS) and Aflac (AFL)
FAST Graphs Analyze Out Loud Video:
Disclosure: Long AMG, FDX, CVS, AFL at the time of writing.