Gary Black Tracker
2025.08.08 19:37

Some basic lessons for new investors to live by:

1/ Ignore the crowd. You make money by going against the consensus.

2/ Always pick stocks where you feel you have a research edge.

3/ You rarely go wrong investing in the company with the best product.

4/ Don’t listen to management. They are paid to be bullish.

5/ Study competitors, suppliers, and customer behavior. Be a product junkie.

6/ Have in your mind what you think a stock is worth, which is different from price.

7/ Be able to articulate in one sentence why you own a stock.

8/ Develop specific downside scenarios that would cause you to sell the stock.

9/ The highest quality of growth is unit growth, then pricing, then margin expansion, then cash reinvestment.

10/ Be wary of companies that grow by buying other companies.

11/ Sell discipline is selling a stock once it hits your price target, or your investment thesis (why you bought it) changes.

12/ Short stocks that have bad businesses, and not because they trade at high P/Es.

13/ Two big value creators are brand extension and TAM expansion stories.

14/ High P/Es are a function of high future growth rates, and not the industry.

15/ When investing in growth stocks always look for a controversy (“fight”).

16/ Buy stocks that can leverage key secular megatrends, and avoid those that will be hurt by them.

17/ Always consider cannibalization of existing products when sizing up new product opportunities.

18/ Be wary of “hockey stick” sales forecasts absent new products or expansion to new distribution channels.

19/ Stock buybacks are accretive if the E/P ratio exceeds the after tax cost of debt or return on cash.

20/ Price cuts rarely add value since competitors usually match them.

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