A low multiple is not an opportunity. It is a warning label.

I spent years getting this backwards when I started investing. A stock at two times earnings with an eleven percent yield felt like the market handing me free money.

It was actually the market pricing, correctly, how much of my capital I was about to lose.

The number that tells the difference is return on invested capital measured against what that capital costs. Above the line, growth builds your wealth. Below it, growth burns it, and the cheap price is the market quietly agreeing.

New piece out the other day on the one number that separates compounders from value traps. Full article link below

What is the worst value trap a low multiple ever talked you into?