Mental Models discussed in this podcast:

• Catalyst
• Activation Energy

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Show Outline

The full show notes for this episode are available at https://www.diyinvesting.org/Episode129

Catalysts in Value Investing

• Catalyst Definition
• Trade vs Hold Return
• Free Call Option
• Catalysts speed up the rate of multiple expansion leading to a high IRR "trade" return
• Business Catalysts vs Stock Catalysts
• Solitron Devices Example

 

Summary:

Catalysts can supercharge investing returns for value investor if utilized properly OR they can distract from a central thesis and cause you to make poor decisions. A catalyst should be seen as a free call option that boosts a "trade" return.