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Chapter 1. Sages and Charlatans: Avoidin... > Red Flag 6: Price Means Everything: ...

Red Flag 6: Price Means Everything: A Great Company’s Stock May Be Too Expensive

James Grant, the founder and publisher of the newsletter Grant’s Interest Rate Observer, says that the most important three words in the financial lexicon are “at a price.” He continues, “Nothing is true unmodified by that phrase, as trite as it seems.” There are times, he says, when even an investment that has a strong stench can be worth it—provided that there is a no-strings-attached giveaway price. Conversely, even the best and most ethically managed company in the world should be left alone if the price of its securities is too high. Grant says he would invest in a company with an egomaniac at the helm if the price was right and its prospects were strong. “There are times when you are paid to make a leap of faith as an investor—but unless you are paid, don’t leap.”


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