Why do we often make fair investment decisions and end up with fair returns? Here are some thoughts.

We are afraid of the EXTREMES

We were taught from young that everything should strike a balance. Don't go to the extremes... and we will be pretty much safe isn't it? That's right and you might even thank yourself for it. Anything with ratios that are too extreme may smell like trouble. For instance, price /NAV of Eagle hospitality trust is at a record low of 0.17, Lippo Malls is 0.44, but will one dare to buy? Certainly not! It's for obvious reasons. Then...

We are afraid of buying into the All Time High Over-valued stocks

This is another subset of fearing extremes. Many times we missed catching growth stocks until their share prices go to the moon and so do their P/Es. As though a lack in foresight is not enough, there comes Price Anchor Bias, which I can't deny I have also fallen prey to....