This is nonsense. Investing is not an exact science. Paraphrasing two of the industries’ priests, you don’t need to know a man’s exact weight to know that he is fat, nor do you need to know a basketball player’s exact height to know he is very tall. If you focus on only acting in those few instances where you have a clear winner and watch for opportunities that come along every once in a while – sometimes years apart – you are likely to do better than the Wall Street analysts that stay up nights trying to decide if Union Pacific is worth $50 or $52. Instead, you wait till the stock is trading at $28 then pounce. Warren Buffett bought shares of Wells Fargo during the real estate panic of the late 80’s / early 90’s at a price-to-earnings ratio of 5! It doesn’t take very many deals like that to make yourself a lot of money over an investing lifetime.
Why do investors find it so hard to admit that they don’t have a clear-cut opinion about a specific business at the current market price? Often, pride is the culprit. For more information on how to overcome these forces, read Rationality: The Investor’s Secret Weapon.
