- The average of everyone's ideas is already reflected in the market price. You need to think about things differently, or at least agree with a minority point of view, to get a different conclusion.
- Sometimes your original idea is really just following the herd.
- Markets are usually, kind of, efficient. Keeping up with high frequency data, news, and views is not a very good use of time.
- You don't have the resources for breadth, or depth, of coverage. The home investor has no hope of out-spreadsheeting, out-reading, or out-sleuthing the professional analysts and portfolio managers. Keep analysis simple and intuitive. Avoid areas where you're uncomfortable doing this. If desired, you can get general market exposure to these areas through ETFs.
- Keep risk management simple: small bets, diversification, and cash. If you do less of one of these three, you have to do more of the other two.
Last updated: September 24, 2014