Step #2: Don't Try to Outguess the Market
The first step to a better investment experience talked about Understanding Market Pricing and used the story of making a pencil by Leonard E. Reed in 1958. Understanding how market pricing works is critical to Step 2 - Don’t Try to Outguess the Market. Trying to outguess the market by finding mispriced securities really goes against the grain in terms of understanding how markets works - or how securities are priced. Instead of using a pencil to help us understand, let’s use a jar of jellybeans.