Any Form of Prediction is Merely Speculation
Investing is a probabilistic activity, and decisions made in a very rational manner sometimes result in poor outcomes. Even when decision-makers formulate a perfect plan and implement it smoothly, unfavorable results can still occur. However, in the long run, focusing on following the correct process, rather than any specific intermediate result, is always wise.
Whenever you want to buy a stock, someone is selling… so, you are forced to frequently ask this question: “Why am I the correct side in this transaction?”
Humans tend to collectively make foolish decisions. In certain situations, gathering together like lemmings, this can explain many of the foolish thoughts and behaviors of smart people.
Margin of Safety
According to Charlie Munger’s theory, it is probably only during a major stock market crash that one can achieve sufficient margin of safety. This puts extreme pressure on a person’s patience, and it might not suit me.
By gradually buying at an average cost (dollar-cost averaging), you can also achieve a certain margin of safety, and after a period of compounding, you can attain sufficient margin of safety.