This chapter delves into the downfall of Theranos, a biotech company led by Elizabeth Holmes, who attempted to deceive with a faulty blood testing machine. It emphasizes the importance of thorough investigation and intellectual honesty in investing, warning against overconfidence and the risks of expanding into unfamiliar areas.
Do you ever find yourself in the process of research and realize that you’re only looking for information that supports your hunches? That’s confirmation bias, and it’s a trap that value investors must learn to dodge as they investigate the next business to buy into.
With billions of dollars on the line at times, there’s no limit to what some people will do to see their companies achieve success, regardless of the ethics involved. Therefore, one of the best tools we can have in our toolbox is knowing how to spot red flags and steer clear of the deception and fraud that can fool even the savviest investor.
In this week’s episode, Phil and Danielle tell us how “being a reporter for your own newspaper” is not only among the more interesting aspects of investing, but why it can safeguard your portfolio and avoid costly missteps.
To know exactly where to start when researching companies to invest in, don’t miss out on your free copy of Phil’s Value Investing Cheat Sheet: https://bit.ly/3QeCCje
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