Priced for perfection

Q: Can you explain the term “priced for perfection”? — C.P., online

A: It suggests that a stock’s price is rather high, with investors expecting perfect performance from it and a correspondingly high valuation. It also hints at riskiness, because if the company makes some mistakes or there’s some bad news, the stock price could take a significant hit. It’s best to stick to “value investing,” where you seek healthy, growing companies whose shares are selling for significantly less than you think they’re worth. That gives you a margin of safety to minimize your downside risk.