One thing that comes up a lot is whether a stock is “too expensive.” But expensive doesn’t always mean overvalued and that distinction matters more than people think.
A company can trade at high multiples and still justify them if growth, margins, and demand continue to support the valuation. On the other hand, something that looks cheap on paper can stay cheap if there’s no catalyst or if the business isn’t improving.
The problem is that it’s much easier to label something as “overpriced” than to understand why the market is willing to pay that price. That’s where a lot of missed opportunities come from.
Understanding what’s already priced in and what isn’t is often more important than the raw valuation number itself.
The difference between “expensive” and “overvalued” is where most mistakes happen
byu/Prince_reaper13 ininvesting
Posted by Prince_reaper13
6 Comments
This sub is a shell of its former self.
This post sounds like a clickbait ad
Good TED talk. Next, can you explain if I should buy low and sell high or buy high and sell low? Because there’s a lot of confusion about that.
Don’t know why all the hate but I’ve learned you are absolutely correct. Once I figured that out , my gains were multiple times better. This same discussion is going on at r/valueinvesting. Lots of debate about mag 7 being value play, yet most post have been about the mag 7.
Of course this is true but damn near everything is in fact overvalued now.
You should figure out the price you want to pay before you even looked at the price.
Trying to figure out why the market price is what it is is a fool’s errand