Is There a Good Reason for a Stock to Drop 50%?

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Mark O'Mara: When you see a stock price drop 50%, your radar says, is there a good reason? He said sometimes the trigger for a company making it onto his radar is because something bad has happened. Sometimes companies are on my list because I like the company, but I don't like it at this price, he added. " Investing is about buying at the right price"

IN THIS EPISODE, YOU’LL LEARN:

00:00 - Intro

03:53 - The importance of having an investment philosophy and how to figure out what your investment philosophy is.

The difference between having an investment philosophy and strategy.

03:53 - An example of what a growth investor’s investment philosophy may be, such as the famous growth investor Peter Lynch.

08:22 - Why Aswath believes it’s better to be a generalist than a specialist in one area of investing.

15:00 - What are value drivers and how to apply them in our valuation process?

15:00 - The 5 basic variables we need to value any business.

24:27 - How to convert these value drivers into a DCF or intrinsic value model.

26:23 - The most common mistakes investors make when valuing a company and how to avoid these.

26:23 - Aswath’s test on how to figure out if your growth rate is reasonable.

29:23 - How to figure out what discount rate we should use?

36:11 - Why Aswath doesn’t believe in a “hold forever mentality” of stocks in a value investing approach.

37:24 - How often we should revisit our valuations for companies?

56:53 - How do companies get on Aswath’s radar?

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

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Related Episode: Listen to MI226: Investing in Small Cap Stocks w/ Rayna Lesser Hannaway, or watch the video.
Related Episode: Listen to RWH005: Meet the Master w/ Aswath Damodaran, or watch the video.

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