Choose wisely. There is only one correct answer to each question.
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1.
Buying the stocks of wide-moat companies provides an automatic margin of safety because _______.
The companies' stock prices will likely appreciate in value anyway. Given the competitive advantages of wide-moat companies, their stock prices will likely rise, eventually catching up to your fair value estimate of them.
2.
When following a fat-pitch strategy, why would you not want to trade very often?
The odds are that the stock's underlying value will continue increasing. Why sell a stock when it keeps rising year after year?
3.
If you want to succeed with a concentrated portfolio of stocks (say, fewer than 20), you should _______.
All of the above. A concentrated portfolio will generally only work if you do all three of these things.
4.
According to fat-pitch strategy, the purpose of holding cash instead of being invested in stocks is that you are _______.
Waiting for the stock prices of strong companies to drop. According to fat-pitch theory, fat-pitch investments are likely to provide strong growth and absolute returns over time. Thus, you can afford to wait until the prices dip.
5.
"Fat pitch" companies normally have _______.
All of the above. Looking for these characteristics will help you identify fat-pitch opportunities.
