My Visa Long is Getting Long in the Tooth
Over my lifetime I have invested in many different things. In the process of doing that, I have learned that there are really only two types of investors. As an investor, you are either active or passive. Being active implies directly managing or being in control of your investment. In contrast, as a passive investor you allow others to manage the asset on your behalf. There are advantages and disadvantages to both approaches, and neither approach is necessarily better than the other. It all comes down to each individual’s personal preference.
When I was younger, one of my active investments was running a quarter horse ranch. Unlike humans, a horse’s teeth continue to grow as they age. Consequently, you can judge the age of a horse by looking into its mouth and checking the length of his teeth. The longer the horse’s teeth, the older the horse. This method of checking the horse’s teeth to determine its age is also the source of another old adage “never look a gift horse in the mouth.”
As a long-term investor in Visa (V), I would describe my experience more recently as a gift. Therefore, I do believe it’s time to question the value of this gift. More precisely, I believe it’s time to question the valuation of Visa.
FAST Graphs Analyze Out Loud Valuation Analysis of Visa
I have been long Visa since May of 2011 and it has been one of the best performing stocks I have ever owned. However, the following analyze out loud video clearly illustrates the undeniable reality that Visa’s stock price has become significantly overvalued. I believe the risk associated with such a high valuation is crystal clear when viewed visually via FAST Graphs. Visa continues to be a great company with a clearly defined future. But investors should never forget that price is what you pay and value is what you get.
Disclosure: Long V at the time of writing.
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