🧠 Does Valuation Matter?



Last week, we published a YouTube video on 10 lessons we learned in 2022.

A few highlights:

  • You can’t ignore the Fed
  • Inflation is back
  • Cash isn’t trash
  • Crypto remains the Wild West
  • Narrative follows price

People seemed to like it.

There was, however, a glaring exception: they wanted to know why we didn’t include “valuation matters” in our list.

That’s a fair question.

The three of us have have different opinions about valuation: Feroldi and Withers consider valuation; Stoffel ignores it altogether.

Regardless of our individual opinions about valuation, we all agree that one year’s return is too short a time-frame to accurately draw any conclusions.

That’s not to say there’s anything wrong with focusing heavily on valuation. Many of the most famous investors of all-time certainly do (Buffett, Klarman, Graham).

Then again, there are plenty of examples of succesful investors that deemphasize valuation (Andreessen, Gardner, Masayoshi Son).

In the stock market, there are countless ways to achieve your goals. None of them are “better” or “worse” on absolute terms.

The thing that really matters: how well suited to your approach is to your temperament. The investing approach you are comfortable with is the one you’re most likely to stick with over time.

And the plan that keeps you in the market is — by far — the best investment approach for anyone.

– Brian Feroldi, Brian Stoffel & Brian Withers

P.S. – We’ll be hosting a FREE introduction to accounting webinar today Wednesday (December 7th) at 11am EST. Click here to register for the event.


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