Is that stock a bargain or a value trap?

Not long ago, I asked how can we tell the difference between a real bargain and a value trap in stock investing.


I recently came across a video by Pat Dorsey which I believe answers this question really nicely:





Thinking of any particular stock now?


Related posts:
1. 3 points in stock investing.
2. Tea with Solace: Valuation, PER and Value Trap.
3. Be cautious as we accept higher risks.

3 points in stock investing.

I like to keep my life simple. I try to avoid complications. 

Life, unfortunately, is rarely as simple as we would like it to be, isn't it?

I am sure we want to keep stock investing simple as well but can it be simple?

1.  Focus on values and not prices.
"Price is what you pay. Value is what you get."

2.  Focus on competitive advantage (economic moats).
“In business, I look for economic castles protected by unbreachable moats."

3.  Focus on having a margin of safety.
"The dumbest reason in the world to buy a stock is because it is going up."





All quotations are, of course, Warren Buffett's.

Distilled to just 3 points, stock investing can be simple. Simple but it definitely requires work.

It can be simple but it is not easy.

Some related posts:
1. 5 rules for successful stock investing.
2. When to BUY, HOLD or SELL?
3. Tea with Solace: Getting ready for investment.
4. Interview with Matthew Seah: Value Investing.
5. Why is Warren Buffett the greatest money maker?