A better approach to investing is to arrive at decisions based on concrete metrics that point to strong
underlying businesses likely to stand the test of time.
Not exact matches
«We believe that the market performance of a share of common stock, over an extended period of time, is
likely to follow the
business performance of the
underlying company» Lou Simpson
And so it is with stocks; when you have confidence in the
underlying business through a detailed assessment of the company, you're far more
likely to act rationally when others are fleeing.
Questionable: None of these balance sheets are in great shape, but aside from the banks, their
underlying businesses are
likely stable enough to bear the strain.
Whether you are leaning towards a style of value investing focused on reversion to the mean or the one focused on finding underappreciated compounders of capital, you will need to be able to understand what the future economics of the
underlying business are
likely to be.
Loans are
likely to be called if market prices decline, the
underlying fundamental merits of a
business notwithstanding.
But noting the
underlying momentum of its US
business, and
likely cost savings to come from its two major acquisitions, we should hopefully see it grow into its current market cap over the next year.
If the gap between price and
underlying value is
likely to be closed quickly, the probability of losing money due to market fluctuations or adverse
business developments is reduced.