Level 1 vs. Level 2 Thinking!

To find the winners, you have to move beyond the obvious.

First-Level Thinking (crowd)
"The earnings were good. Buy."
"The news is scary. Sell."
Result: You follow the herd and get average returns.

Second-Level Thinking (pros)
"The earnings were good, but were they better than I expected?"
"The news is scary, but is the price already beaten down and offers a margin of safety and good upside?"

You can always find value in where others got confused.

First-level thinkers react to the present.
Second-level thinkers anticipate the future. You need to be 3 steps ahead.