A framework to see your investing opportunities
I have a simple framework to classify each stocks. After I have done a fundamental analysis and valuation, I see which cell it falls into based on the matrix shown below. The cells are formed by the combination of margin of safety on the horizontal axis and business fundamentals on the vertical axis.
Conceptually
Cell A – best investment opportunity
Cell B – this could be Warren Buffet “wonderful company at fair price”
Cell C – Ben Graham “cigar-butt” investment
Cell D – avoid
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