A “good company” does not equal a “good investment.”

Recently, my friend and I discussed stock investing, and I noticed that many people have a misunderstanding: “a good company” does not mean “a good investment.” These are two different things. Let's take Google for example. When it was priced at $150, it seemed like an unstoppable company with “excellent financial performance” and a “culture that encourages innovation.” However, when it was priced at $95, it seemed hopeless due to “ChatGPT surpassing it” and “slow R&D.”

The flaw in this way of thinking is that people only see the “present” and not the “future.” We need to reflect on ourselves, especially those who base their investments on fundamental analysis, and ask ourselves if we have made this mistake. Should we buy undervalued stocks or go after overvalued stocks? If a company's strengths/weaknesses have been revealed in news/financial reports, then it's not a secret; it's likely already been digested by institutional investors (reflected in pricing).

If we trade based on “already reflected” facts, then we are likely to be cut into chives. Investing isn't as simple as following the trend. There are 24 million people working in the financial industry around the world. If we're trading based on “I think this company is good,” are we treating these 24 million people as plasticine?

The challenge for investors is whether they can “find opportunities in the face of adversity.” Only by “anticipating opportunities” can we reap profits. Whether we're looking at technical analysis or fundamental analysis, when we notice that stock prices are undervalued and have a “high risk-reward ratio,” it's time to act.

So, I say the essence of investing is “exchanging risk for profit.” Real big money often starts with losses. Before investing, we should ask ourselves: Are we confident in this company? After reflecting a variable, what is its “estimated value”? Are we really buying low and selling high? Where should we enter/increase holders/stop loss and take profit?

We should think rationally and develop good strategies, rather than blindly following others. Only then can we avoid going astray.