Would a person who believed very strongly in financial analysis, studying financial statements, following the recommendations of the world's greatest investor, ever buy a stock like AMZN? Or GOOG? FB? TSLA?
With the exception of TSLA all of these stocks would be bought because of phenomenal revenue growth potential. That growth had better show up in future financial statements.
Twenty years ago you would look at Walmart's financial statements, and say, a huge chunk of those sales will eventually belong to Amazon. So yeah, ya gotta buy Amazon. It's a financial statement decision.
If, as the year progress, the financial statements DIDN'T play out the way you forecast (ie, you don't own Amazon, you instead bought one of the Amazon wannabes) you would sell because, the financial statements of your Amazon wannabe aren't delivering the forecast numbers, instead Amazon is delivering them (just look at Amazon's financial numbers!).
And today, when you look at Amazon, you gotta use today's financials and some future forecast of what's available to them to determine whether today it's a good buy or not. And then the future financial statements will tell you whether your forecast was correct, or not.
Even the vaguest theme based investor has to believe something along the lines of "revenues and earnings are going to grow", and that requires from what (historical financials) to what (future forecast financials).
Nobody just says "This stock is good!" without any financial explanation. |
