Sunday, August 18, 2013

inverted questions

Here are the top 5 inverted questions I like to ask myself when looking at stocks. It helps me break up the mindset of trying to find bullish reasons.

    How can I lose money? vs How can I make money?
    What is this stock NOT worth? vs What is this stock going to be worth?
    What can go wrong? vs What growth drivers are there?
    What is the market implied discount rate? vs What is a fair discount rate?
    What is market implied growth rate? vs What is the future growth rate?

and a bonus question.

    If this drops 50% today, will I buy more? vs When will I sell?

Thank you Charlie Munger for teaching me to “Invert, always invert”.

-- by Jae Jun

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