This is the Biggest Mistake Value Investors make
Value Investing is seductively easy. Summarized into one sentence, Value Investing is the art of picking stocks that are undervalued, a.k.a. buying a dollar for 50 cents.
The big problem - paraphrasing what Johan Cruyff said about football - Value Investing is a simple concept, but it is extremely hard to invest with simplicity.
How Value Investors Buy Books Consider the following analogy:
Put yourself in the shoes of a Value Investor in a book store. Having a natural inclination to buy stuff that is on undervalued, you will automatically be drawn to the table with a big sign saying:
Books 50-80% OFF! And therein lies the problem.
Buying a book is a bet with an asymmetric outcome. The downside is that you will buy a book and it might turn out to be a waste of your time, plus the $10 to $30 it cost to purchase it. The upside, however, is close to infinite. A good book can fundamentally alter your life.
Mistakes of Omission Most of the books on the discount table are crap. They are ther…
The big problem - paraphrasing what Johan Cruyff said about football - Value Investing is a simple concept, but it is extremely hard to invest with simplicity.
How Value Investors Buy Books Consider the following analogy:
Put yourself in the shoes of a Value Investor in a book store. Having a natural inclination to buy stuff that is on undervalued, you will automatically be drawn to the table with a big sign saying:
Books 50-80% OFF! And therein lies the problem.
Buying a book is a bet with an asymmetric outcome. The downside is that you will buy a book and it might turn out to be a waste of your time, plus the $10 to $30 it cost to purchase it. The upside, however, is close to infinite. A good book can fundamentally alter your life.
Mistakes of Omission Most of the books on the discount table are crap. They are ther…
