One of my favorite concepts is the law of the instrument. The law of the instrument relates to the over-reliance on a familiar tool.
The most common use of the concept is in the phrase "To a man with a hammer, everything looks like a nail".
I think being aware of the law of the instrument can be a great aid to investors.
As an investor, using only one tool to think about future cash flows and value companies is not going to work very well. Every company is different (even those within the same industries) and determining intrinsic value requires many tools and many different angles of thought.
I'd suggest that the harder a company is to value, the...
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