Call me old-fashioned, but I believe valuations still matter.
Many folks see the market hit all-time highs and want to get a little more skin in the game. It’s normal to try and ride the hottest stocks higher, betting on more quick gains.
This strategy might work as a short-term trade. But the fundamental investor in me has to remind everyone that prices matter. Paying a sky-high valuation for a flashy stock will burn you in the end more often than not.
You can end up with big losses that way… even if all the hype comes true. Let me explain.
This post originally appeared at DailyWealth.