A simple decision tree before buying a stock

Get started / Saturday, November 5th, 2016

Decision tree systematize the decision-making process in a visual way and prevents us from mental hacking, a mental shortcut that save time and reduce stress of making a decision. Mental shortcut works well in most of our daily decision i.e what to have for lunch; netflix or catch up with friends etc, and it is essential, but can be disastrous when applied to investing.


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4 Replies to “A simple decision tree before buying a stock”

  1. This is a great advice, thank you! Thanks for the easy-going posts and solutions, you offer genuine, pro-active and attentive customer service.

  2. Ricky,

    Isn’t the first column “Is it undervalued?” redundant? The third one, i.e “Is there sufficient margin of safety?” is to answers that question right?

    1. We tend to trick ourselves into believing something is undervalued. Margin of safety does answer that question partly. Beside using MOS to express how a stock is trading less than its true value, MOS can also be used on other factors i.e. quality of the stock, moats, management etc

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