Here are some excellent words of wisdom for you copied from...

Here are some excellent words of wisdom for you copied from “***” might help clear up your confusion
”it is entirely possible to lose a lot of money investing into a high quality, fast growing business that has a bright future.You could have bought shares in Apple (NASDAQ:AAPL) in 2000 for $150 a share, with the assumption that the company would grow revenues and profits strongly for many years. And you would have been dead right: Apple's revenue grew by around 130% over the subsequent 5 years.Trouble is, between 2000 and 2005 you would have made a 0% return, and also experienced a 90% drop in the share price along the way. Valuation matters. Similarly, you can make great returns by buying shares in something that is slowly going out of business.Shares in Myer (ASX:MYS) were going for 10c each a little less than a year ago. This is a business whose sales and earnings have been consistently dropping for the last decade (by a lot), and that will likely become totally irrelevant within the next decade.Myer's earnings per share and return on equity 2011 - 2020And yet, shares in Myer have returned over 200% in the past nine months.Again, valuation matters.Most (but not all) companies on the ASX are probably worth more than zero. None are worth infinity. Logically, then, somewhere between these two extremes is a price that is fair -- that is, will allow for an acceptable rate of return. The bigger the discount you can pay to this fair price (also known as the intrinsic value) the better your returns will be.Your job as an investor is to determine what price is fair, and then use this to frame your buy/sell decisions.To be clear, it's impossible to accurately know what a business is really worth. All you can really hope for is an informed guess. But even something that is vaguely right is going to be of immense value.In fact, the very process of trying to work out a fair price is going to give you a huge edge on other investors.We're not going to go down the rabbit hole of valuation methodologies here, but it is something we'd urge you to look into. Buying something simply because it has a good story, or because the shares happen to be shooting higher is, let's say, a bold strategy... “