It's widely known that buying quality companies is a sound strategy, but many forget that valuation is just as important.
In the late 1990s, both stocks traded at high P/E ratios—Costco above 30 and Walmart above 40. Investors paid a premium, expecting continued growth. But what followed was over a decade of stagnation. Walmart’s stock didn’t break out of its range until 2011. Costco, despite strong business growth, stayed flat until 2010. The issue wasn’t t...

It has already dropped to a point where it no longer feels significant...