The chart is not the business

Price tells you what the crowd feels today. It does not tell you what the business is. Confusing the two is the most common, most expensive mistake in investing.

A stock down 60% triggers a reflex: it must be broken. Sometimes it is. Often it is a perfectly good business the market got bored of, or scared of, and put on sale. Meanwhile a stock that has run up hard feels like a winner you missed, when sometimes it is a flat, unremarkable company that simply got re-rated to a richer multiple with no more room to run.

So we score the business, not the price action. We ask what it does, how it makes money, whether the moat is widening, whether it can compound. A chart reflects how the crowd feels right now, not the quality of the business underneath it. A company the headlines hate can be a wonderful business; one they love can be mediocre. Learn to look past the line and at the thing underneath it.