To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of course, is not the prevailing view at most business schools, whose finance curriculum tends to be dominated by such subjects. In our view, though, investment students need only two well-taught courses - How to Value a Business, and How to Think About Market Prices.
The most common cause of low prices is pessimism - sometimes pervasive, sometimes specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces.
Now, occultism is not like mystic faculty, and it very seldom works in harmony either with business aptitude in the things of ordinary life or with a knowledge of the canons of evidence in its own sphere.
Though inclination be as sharp as will,
My stronger guilt defeats my strong intent,
And, like a man to double business bound,
I stand in pause where I shall first begin,
And both neglect.
Adventure upon all the tickets in the lottery, and you lose for certain; and the greater the number of your tickets the nearer your approach to this certainty.
Big business is not dangerous because it is big, but because its bigness is an unwholesome inflation created by privileges and exemptions which it ought not to enjoy.