PROBABILITY OF VALUE REALIZATION
What do you do if there are multiple bargains at the same time?
How do you distinguish which ones offer better value than the other ones?
One stock is trading at 40% below its intrinsic value and another at 70% below its intrinsic value.
- WHICH ONE DO YOU INVEST INTO?
- WHAT IF ONE OF THE INVESTMENTS HAS A GREATER PROBABILITY OF VALUE REALIZATION THAN THE OTHER?
Note: The best absolute value may not always be your best investment choice.
As a focused value investors, we want no more than a few investments in the portfolio at any one time.
As the number of investments in the portfolio build up, every decision make will be based on whether it is a better investment in comparison to any of the current holdings.
This is opportunity cost at its finest action.
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