Getting Defensive

As value investors, we're constantly searching for unique opportunities where market prices have diverged materially from intrinsic value. One of the first steps in our process, of course, is ascertaining the fair value of a business.

Due to difficult-to-understand businesses, businesses in high-change industries, or simply opaque situations surrounding companies, we may be quick to pass on certain stocks. While acknowledging the limits of our knowledge can feel uncomfortable, there's great value in understanding the scope of our competence. So much so, that legendary value investor Charlie Munger is quick to acknowledge it.

In February, Munger stated that he couldn't offer an opinion on whether high-flying technology stocks were overvalued. And there's nothing wrong with passing on a stock. As Munger's investing partner Warren Buffett has offered in his baseball analogy:

“The stock market is a no-called-strike game. You don't have to swing at everything — you can wait for your pitch.”

And though technology stocks have driven