A few years ago, I looked at Baldir (NASDAQ: PLTR). There was some toning about the enormous capabilities of the company, but I did not decide to buy shares in the nitheer.

For five years, it rose 1576 %.

So my decisions not to invest means that I missed some gains that can be believed.

However, unlike some lost opportunities, I do not regret it.

For one reason, the current Palantir shares evaluation looks ridiculous for me. It is traded on a price ratio (P/E) from 513. Yes, 513!

But there is another reason that I do not regret my decision to avoid the company when I looked at it for the first time.

Warren Pavite approach

The billionaire Warren Buffett investor often talked about commitment to what you know when investing.

Sometimes it defines it as staying inside the “efficiency circle”. As Buffett sees, the size of your efficiency circle does not matter – just to determine it and stay inside it.

Why is this important?

A successful investment revolves around judgment on the potential value of the company and investment for less (perfectly, much lower) than this evaluation.

So putting money in a job that you do not understand does not really invest, but just speculation.

Black box

Some of what Palantir does is within the circle of my competence. I understand its target market, and in the specific sense, I feel at least I understand some of its products offers.

However, to some extent, the company is a black box for me. That’s right now, just as it was true when I looked at it for the first time in years.

Certainly, there are continuous sales opportunities for customers for customers for a type of data services provided by Palantir. But it is not the only company that is keen to build its presence in this field. What distinguishes him? How much is this competitive advantage?

I simply do not know. I can read Palantir accounts like anyone else and learn about its amazing growth. But I still do not really understand whether or not this growth depends on sustainable competitive advantages.

Although others may have more insight, I can’t understand whether Palantir has a business model that can help him achieve big long -term profits.

A possible warning signal?

Meanwhile, this P/E ratio is simply amazing to me. This is not a small company – it has $ 376 billion Market value. However, it is currently being sold for more than 500 times in profits.

Is this a sign of the butter market that has been stumbled?

Not necessarily. One share can easily challenge the wider market trends. What I see as a great estimate of the Palantir share does not necessarily mean that the broader securities market is exaggerated.

Others who understand the Black Black Bus Business may think it really deserves this evaluation. It has an impressive and advanced customer base that it seems to have strongly bought its services.

However, such an evaluation seems ridiculous for me. I see it at least as a warning sign. It is a useful reminder for me to stop and think about the assessments of technology and stock companies in general when thinking about what to buy or sell this fall.