Monday, February 13, 2017

This time it's different

“This time it’s different”. I bet these words have cost investors more money that any other since the inception of stock market. In fact, I would go out on a limb, and say that these words have probably lost investors more money than any wrong analysis or forecasts. These four simple words that make everything that we KNOW is wrong seem right. This time it’s different.

Market at historically overpriced P/E ratios? Company using non-GAAP or new accounting measures while reporting earnings? An overpriced IPO with very little cash flow? A business that you don’t understand but everyone says is critical to the “new economy”? Well, don’t worry dear reader. The answer to all the above questions is “This time it’s different”. I know you feel better already.

I consider myself to be a mostly rational, logical member of the human species. I am not easy to fool, at least in my opinion. But I must be an excellent salesperson, because every time I say these words to myself, I am able to justify to myself my every investment that I think is not quite right. 

Speaking for myself, I have learnt the hard way to watch out and be extra cautious whenever I find myself using these words. Of course, that’s only true when I am not using the five words that have probably lost investors even more money than these four words. “This time it REALLY is different”.

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