I want you to ponder a simple question ... think about the last stock that you bought and ask yourself, "Why did I buy that stock?"
Chances are you bought it because you liked the company, or their product. Or perhaps you thought it was undervalued, or because a friend or advisor recommended it. Maybe you're more savvy and you bought it because they delivered strong revenue or earnings growth, or because the stock, from a technical perspective, looked poised to head higher.
None of these answers are necessarily wrong, but there's a hidden element I want to make sure you're aware of and understand.
To convey this more effectively, let's walk through a frequently used example about decision making called the "Newspaper Beauty Contest." Many of you may remember this media promotion from years back.
Here's the gist: A newspaper would run photographs of many beautiful women and invite readers to mail in a ... Log in or subscribe to continue reading.
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