Great question! I’m going to go super loose here. To me, fundamental investing is about buying companies at attractive prices based on their expected returns. Is this the same as buying AAPL because you love its current price and how quickly it has been going up? No. In fact, fundamental investing doesn’t care what the price has been in the past. It doesn’t care about technical charts or /r/WallStreetBets. It’s about buying a small slice of an existing business, with the expectations that the company’s future earnings will justify the price you paid.
What makes fundamental investing hard?
You have to find a wonderful company. You have to not pay too much for it. You have to sit on your hands and let the management of the company work for you. You have to wait years to find out if you were right and this is a wonderful company. You might have to turn down very high offers from others to buy your ownership shares. You might have to watch while no one else wants to own your company. If that doesn’t sound hard, you should know that most companies aren’t wonderful. You should also know that humans have tons of psychological issues.
Why do I think I can do this?
I’m not sure that I’ll beat average returns. It is very possible I shouldn’t be buying individual stocks. However, I do have a decent track record in the past. My mistakes haven’t been buying the wrong companies, it has been not buying enough of the good companies or selling out after I’ve tripled my investment instead of sticking with the company.
I hope I’ve learned enough from my previous mistakes. I hope I’m not overconfident from lucky previous results. I also hope I have the courage to take a big swing if the right opportunity presents itself.