Few months ago, retailers were lured into a strategy of buying quality growth stocks at any price aka Buy At Any Price (BAAP).
Nobody even bothered about looking at valuations of these stocks trading at PE of 50-200x.
Today, almost all of these high PE stocks are trading at minimum 30% to 70% discounts from their peeks.
2-3 stocks falling 50% in portfolio of 10 companies is perfectly acceptable. Entire portfolio falling by ~50% is not acceptable.
And this is where Coffee-Can investing strategy failed for many.
Many considered Coffee-Can strategy to be screamingly overvalued monopoly business full proof of inflation, rate hikes & general business slow downs.
However, most of these businesses too are facing the heat of inflation, raw material price hikes & increased competition resulting into their stock prices correcting viciously.
Always prefer value over price. This ensures margin of safety to your portfolio in long run.
