I thought this was a great quote from Charlie Munger: investors chasing the latest cyclical trend often forget that "the old cyclicality is going to come back"

(From @williamgreen72's "Richer, Wiser, Happier" book)

In @HowardMarksBook's memo early this year, one key thing I realized is how wrong I was to dismiss some businesses because I thought they were overvalued simply after looking at the P/E, P/S ratio etc.

You can't determine a business is overvalued without knowing the in-depth qualitative fundamentals of the business, because otherwise where is your edge? Anyone in the world can simply look at a company's P/E ratio.

I know this seems obvious, but so many people on fintwit are very guilty of this - myself included.

Unless I really know and understand a business, even if it has a seemingly absurd P/E or P/S ratio, I will refrain from concluding it is overvalued. It's just lazy and wrong.

The weird thing about this is that when I'm normally researching a business, I totally understand this about valuation and do in-depth research and determine if it's undervalued. But then I'm quickly dismissive of a tech company that trades at 50x earnings and say it's overvalued

Remember in March when all the headlines/'experts' were saying that the 10Y was going to hit 2% very soon, and it was going to cause this and that to happen, etc.?

No-one actually knows what interest rates or the economy is going to do & people are just terrible at predicting it

Howard Marks strongly believes that investing based on macro predictions is a bad idea (macro predictions are more often wrong than not): “I don’t believe in macro forecasts”, here's an extract from his memo earlier this year as well: