Spotting Stock Lies in Three Steps

Your stock is lying to you if its expected return doesn't cover its risk. Here's how to spot

the lie in three moves. First, price the risk. Think of it as the

paycheck you demand for riding a stock’s rollercoaster. If what you expect to earn doesn't

beat what the risk demands, it's a hard pass. Next, map the cash flows.

Is the price tied to future dividend checks? Or do you need to value the whole

business, subtract its debt, and see what's left for you? Finally,

compare to reality. If your value beats the market price, it's a green light. Price the risk,

value the cash. Once you get the story, the math is just the subtitles.