A Planned Approach to Buying and Selling
Successful investors in the stock market have a plan for each stock they buy. The process starts with identifying the stock and determining a fair market (intrinsic) price for the stock. You then analyze the company’s economic advantage (economic moat) to determine if it is wide and deep enough to provide protection for the foreseeable future. Having satisfied yourself that you have a realistic fair market price that accurately values the company and includes an economic moat, your next step is to decide what the top price is you want to pay.
Margin of Error
No matter how hard you work at determining a fair market price, you need to allow for the possibility that you could be wrong or a service like Morningstar ...