"If a business does a million in sales, would you pay a hundred million for it? That's the question to ask yourself." Karim Rahemtulla, Head Fundamental Tactician, Monument Traders Alliance I hate losing money. But sometimes the trades that hurt the most end up teaching you everything about how markets really work. Bryan called it my "biggest fly in the ointment trade of the entire year." He wasn't wrong. The Trade Everyone Thought Was Stupid While everyone was paying $100 for every $1 in sales on Palantir, I bought Merck. Let me explain what that means. If you look at Palantir, when they say it's trading at 100 times sales, you're paying $100 for every $1 in sales. Which business would you invest in? If you were a business person going out there looking at a business doing a million dollars in sales, would you pay a hundred million dollars today for that business? That's the question to ask yourself. The Payment Game Psychology But Wall Street wants you to get into the payment mentality. Like walking into a car dealer - "Oh, it's a million-dollar car. I don't care. What's the payment? Yeah, I can afford $300 a month. Give me something for $300 a month." That's the mentality Wall Street wants you to get into. Don't look at the big picture. Look at how much you can afford. "Oh, Palantir is only trading at $165. That's nothing. Don't think about the 100 times sales. Just think about $165." That's crazy. When Reality Hits We're almost back to our break-even point on Merck now. We blink our eyes, and that thing is about to turn profitable. They just raised their dividend yesterday. This Is Reversion to the Mean | 
0 Response to "My Worst Trade of the Year Just Turned Around"
Post a Comment