Last week I wrote about Howard Marks and his thoughts on Second Level Thinking. To recap, here are some examples of how First and Second Level Thinking differ First Level Thinking says – It is a good company, let’s buy the stock. Second Level Thinking says – It is a good company, but everyone thinks it is a good company. The stock is overrated and overpriced, let’s sell the stock. First Level Thinking says – The outlook calls for low growth and rising inflation. Let’s dump our stocks. Second Level Thinking says – The outlook stinks, but everyone is selling in panic. Buy! First Level Thinking says – I think the company’s earnings will fall, sell. Second Level Thinking says – The company’s earnings will fall, but it is already priced in. If it falls less than what people expect, the pleasant surprise will lift the stock. Buy. First Level ......