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Don't chase highflying stocks from "summary" of The Little Book That Beats the Market by Joel Greenblatt
Trying to chase highflying stocks is a bit like trying to catch a falling knife - it's a risky move that can end up hurting you. When a stock has been soaring in price, it's natural to want to jump on the bandwagon and ride the wave of success. However, what goes up must come down, and highflying stocks are often overvalued and due for a correction. Investors who chase highflying stocks are essentially buying into the hype and momentum surrounding the stock, rather than focusing on the fundamentals of the company. This type of investing is driven by emotion rather than logic, and can lead to poor decision-making and ultimately, losses. Instead of chasing highflying stocks, it's better to focus on buying good companies at bargain prices. By following a disciplined investing strategy based on value investing principles, you can avoid the pitfalls of chasing after hot stocks and instead build a portfolio of solid companies that are trading at a discount to their intrinsic value. In the long run, this approach is more likely to lead to sustainable returns and protect your capital from the volatility of the market. Remember, it's not about trying to time the market or catch the next big winner - it's about investing in companies that have strong fundamentals and are trading at a discount to their true worth. By staying patient and disciplined, you can avoid the temptation of chasing highflying stocks and instead focus on building a successful investment portfolio.
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