Part 2 of 5 The Value Investor Journey

Where your approach has a blind spot

Every investing style has one. These four scenarios are tailored to the way you think — and show exactly where it can quietly cost you.

Intrinsic Value: What a business is actually worth, based on the cash it can generate — independent of its current share price.
Margin of Safety (MoS): The discount between a stock's price and its intrinsic value. A buffer that protects you when your analysis is partly wrong.
Moat: A durable competitive advantage (brand, switching costs, cost advantage, network effects) that protects a company's profits.
Free Cash Flow (FCF): The cash a business generates after operations and investments — the money truly available to owners.
P/E ratio: Price-to-Earnings: the share price divided by earnings per share. A rough gauge of how expensive a stock is relative to profits.
Value Trap: A stock that looks cheap on the numbers but is cheap for a good reason — a business in genuine decline.

Scotti Quick Start (1/7)