Warren Buffett is making news again.
The billionaire investor said he 'overpaid' for Berkshire's 26.7% stake in Kraft Heinz, the packaged food group, when he purchased it along with 3G Capital in 2015. The news sent Kraft Heinz (KHC - Get Report) shares tumbling on Tuesday.
So, let's take this from an education angle.
Action Alerts PLUS senior analyst Jeff Marks breaks down three signs that you might be overpaying for a stock.
First, look for the catalyst - the catalyst being an event that can sway the stock either way, Marks said.
Secondly, watch out for whether or not the stock has become a crowded trade.
Lastly, look out for stocks that are going up, maybe not on fundamentals but more of like the sector characteristics, said Marks.
Watch the video above to hear more on the reasons why Jeff Marks zeroed in on those three signs.