Saturday, 25 January 2014

Hopefully, you won't have to find out the hard way - QUALITY first, then PRICE. When in doubt, throw it out!

The most important task is in investing into a company is in assessing its quality.

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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