Q&A: What Does It Mean When An Investor Is "Valuation Agnostic?"

Q&A: What Does It Mean When An Investor Is "Valuation Agnostic?"
Carl Hazeley

about 3 years ago1 min

Mentioned in story

Question from Tom: What does it mean if an investor is "valuation agnostic"?

Answer from lead analyst Carl: Put simply, Tom, a valuation agnostic investor doesn’t take into account valuation metrics – like a firm’s share price compared to its predicted earnings per share – when evaluating a company, meaning they’re equally happy to buy its stock whether it looks cheap or expensive. That’s because they reckon buying into a company with strong future prospects can be a good idea no matter its share price – which, after all, tends to rise in line with earnings growth in the long run, even if it fluctuates in the shorter term. It’s an investing approach that may have been popularized by a quote taken from a letter Warren Buffett wrote to his company’s shareholders: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."



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