Welcome To The Long Wealth Newsletter (July 30th). (est. 4 min read)

In today’s newsletter we will go over:

• Value Traps

• How To Avoid Value Traps

• And much, much, more..

Actionable Tip Of The Day

Don’t fall into Value Traps.

A value trap is when a stock appears to be undervalued based on traditional metrics, but in reality, it's cheap for good reasons and unlikely to appreciate.

It’s basically when a stock looks cheap but it’s a poor investment.

This could be due to the company facing fundamental business problems.

Top Links Of The Week

• Get Insights From Experienced Investors In Our Free Community (link)

• The Best Investing Strategy Of 2024 (link)

• Join The Waitlist To Find Undervalued Stocks With This Screening Tool (link)

• You Need This Free Charting Tool If You Want To Perfect Your Buy & Sell Decisions (link)

Deep Dive

Here's more about value traps and how to avoid them:

1. Look beyond basic ratios: Don't rely solely on certain ratios.

2. Analyze industry trends: Ensure the company isn't in a dying industry.

3. Examine cash flows Strong, consistent cash flows are crucial.

4. Check debt levels: High debt can be a red flag.

5. Assess competitive position: Look for sustainable competitive advantages.

6. Study management quality: Good leadership is essential for turnarounds.

7. Look for catalysts: Identify potential events that could drive the stock price up.

8. Beware of serial underperformers: Be cautious of stocks that have underperformed for years.

9. Consider why it's cheap: Understand the reasons behind the low valuation.

10. Use multiple valuation methods: Don't rely on a single metric or method.

Darold Trinh

Long Wealth Newsletter

How I Can Help

• Subscribe To My Youtube: I have over 200 hours of free video training on my Youtube (link)

• Get My Free Trainings: Want free trainings that cover everything about investing? I made free trainings that cover undervalued stocks, setting your entries and exits, technical analysis, and more. (link)

• Get My Mini-Course: If you’re looking to improve your investing but don’t want private coaching, I have a course that teaches you everything you need to know (link)

• Join The Long Wealth Capital Mastermind: If you want financial freedom, we have worked with over hundreds of students (apply here)

Poll

Tell me what you think. I always want to make these newsletters as useful as possible.