As I was getting my laundry ready today, I came across a stock headline about Kenvue, the spinoff from Johnson & Johnson. A financial analyst dropped their price target to $26 per share, and it got me thinking—this is exactly why fundamentals should be the focus for any value investor.
At the end of the day, Warren Buffett, Charlie Munger, and other great value investors aren’t obsessing over industry trends or analyst predictions. They’re looking at the business itself. And that’s how I approach investing, too.
Let’s say the lollipop industry is struggling, but there’s one company thriving. Instead of assuming all lollipop stocks are bad, a value investor would take a closer look at that one company. Why is it doing well? Does it have a competitive edge (or “moat,” as Buffett calls it)? Is it cooking its books to look successful, or is it actually performing well?
This is why understanding fundamentals matters—it tells you whether a company is genuinely strong or just appears strong on paper.
Don’t Follow the Headlines—Follow the Business
I don’t check fundamentals every day because once I’ve invested in a company, I’ve already done my research. A new report saying, “Kenvue isn’t worth it,” while another says, “Kenvue is a buy,” doesn’t change anything for me. There will always be conflicting opinions.
During the pandemic, a lot of people panicked when stocks dropped, thinking that businesses like Coca-Cola were in trouble. But they weren’t looking at the business—they were looking at the stock price.
I kept buying Coca-Cola, even as it dipped, because I understood the business. People were still drinking Coke. The company had enough cash reserves to weather the storm. A short-term dip in stock price didn’t change Coca-Cola’s long-term value.
I don’t turn on CNBC for stock advice. I don’t follow daily headlines. I buy businesses, not stock prices.
Investing is About Psychology Too
One of the most underrated aspects of investing is psychology. You can know all the financial ratios in the world, but if you panic-sell every time the market dips, it won’t matter.
Investing requires emotional control. If you’re the type of person who gets anxious seeing red in your portfolio, you need to recognize that about yourself. That’s why I don’t check stock prices constantly—I know my temperament.
A lot of people let fear control their decisions. They sell a great company just because the price is down, without asking, “Has anything actually changed about the business?” A strong company is still strong, whether the stock is up or down.
This is why understanding yourself is just as important as understanding the companies you invest in.
Investing Doesn’t Have to Be Complicated
I’ll be honest—I’m not some expert at reading financial statements. I can’t always spot when a company is cooking its books. I’m still learning, and I’ve only been investing seriously since 2020.
But a lot of investing is intuitive. Companies like Coca-Cola aren’t going to collapse overnight. Yes, the stock market fluctuates. Yes, recessions happen. But strong companies survive.
If Coca-Cola needed to cut costs, they could reduce their product lineup, focusing only on bestsellers like Coke and Diet Coke. They’d adjust, adapt, and move forward.
Simon Property Group was another example. During the pandemic, when everything was uncertain, I bought in at $55 per share. They had no trouble raising capital, which was a sign they were financially strong.
At the time, I didn’t know that was a classic indicator of a resilient business—I had just made the decision based on my own reasoning. Later on, private investor Joshua Kennon published a post explaining that during a crisis, companies that can easily raise capital are usually the strongest. It was interesting to see that I had already made that decision before even knowing it was considered a key sign of strength.
A lot of investing comes down to understanding business basics.
How to Analyze a Company’s Fundamentals (Without Overcomplicating It)
Some people think they need to memorize every ratio before they can invest. But you don’t have to know all the technical jargon to understand a business.
Even common terms like P/E (price-to-earnings ratio) took me a while to remember. With dyslexia, abbreviations can get confusing—was it price per share or price per earnings? The key isn’t memorizing terms; it’s understanding what they mean.
Think of it like music. Some musicians can’t read sheet music but can still play by ear. Investing works the same way. Some people don’t know every financial term but can intuitively recognize a good business.
A strong business is one that:
- Sells a product people actually want
- Has an advantage competitors can’t easily copy
- Can survive downturns and adapt to change
That’s more important than knowing every formula.
The “Too Hard” Pile: Knowing When to Walk Away
Charlie Munger always said, “If a business is too hard to understand, throw it into the ‘too hard’ pile.” And that’s exactly what I do.
If a company’s business model is too complicated, I don’t waste my time. Sure, I might miss out on some profits, but I’d rather sleep well at night knowing what I’m invested in instead of guessing.
Investing doesn’t have to be overwhelming. Strip it down to the basics:
- What does the business do?
- How does it make money?
- Does it have a competitive edge?
- Can it survive tough times?
If you can answer those questions, you’re already ahead of most investors.
Final Thoughts
Don’t get caught up in stock prices, headlines, or trying to memorize every financial ratio. Focus on understanding the business. A great company will succeed long-term, regardless of short-term market noise.
And if something feels too complicated? Throw it in the “too hard” pile. There are plenty of great companies out there—you don’t have to invest in every single one.
The Broke College Student 
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