Do I know of anybody who has lost everything in the stock market?

[i4value]

Valuation is about projecting the future earnings. The challenge then is that if you have an optimistic picture, you will end up with higher earnings than if you have a more conservative picture. So how do you ensure that your picture is realistic? That is why keeping within your circle of competence is important as we can easily get carried away with telling stories about the future.

Me? I stick to cyclical stocks as the repeated patterns places some limits on the story telling. The repeated patterns makes projecting the future a bit more "reliable".

Biotech companies with its "hit-or-miss" drug programme can be a real challenge for projecting the future