"This time is different," is widely accepted as the most dangerous phrase in investing. Author of the new book The Art of Value Investing, Whitney Tilson has a 3-word phrase that's done even more damage to investors this year: "I missed it."
"It's the phenomenon where you look at a stock that's doubled in the last year and you just say 'I missed it' and you don't do any further research," Tilson says, in the attached video.
Everyone wants to be the first to own an obscure company that becomes a mega-cap or boast about stepping in to buy the most recent market panic. But buying a market or stock that's been on a tear requires an investor to risk being "the greater fool." Studies show that overcoming the fear of losing money or looking bad is much stronger than the desire to seek reward.
Tilson says the most important part of good investing is the ability to understand how to value a company and recognizing when market inefficiency is creating opportunity. Once those skills are in place, what differentiates the good investors from the great is controlling emotion.Read More »from There Are 3 Words Every Investor Must Avoid, Warns Tilson