Chapter Four: Apply Common Sense
Revised and updated | Build Wealth with Common Stocks: Market-Beating Strategies for the Individual Investor
Apply Common Sense to Your Investing
CHAPTER FOUR SUMMARY
On Common Sense Investing
Identify your circle of competence within the sectors and industries that contain the common shares of your targeted companies.
History shows that retail investors’ portfolios that follow the crowd often lose momentum at market extremes. Stay away from the herd.
The Wall Street consensus is often senseless. Don’t necessarily assume it’s a clear buy or sell signal. Instead, see it as a reason to do the opposite.
Buying and selling common stocks by trying to predict future events is just like investing based on hope. Focus on objective facts and ignore subjective forecasts.
To paraphrase baseball legend Yogi Berra, investing is 90 percent half common sense. The other half — up next in Chapter Five — is patience and discipline.
Learn more about the principles, strategies, and practices of buying and accumulating stocks of quality companies — when trading at reasonable prices — that have a proven history and a strong likelihood of generating compound total returns from capital gains and dividends across all market cycles.
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