Anchoring bias and averaging up examples

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Andrew and Dave break down three Peter Lynch principles from Beating the Street and how they apply them in real investing decisions. The focus is on avoiding “rearview mirror” thinking, building conviction in great businesses, and finding opportunity where nobody’s paying attention.

They cover examples like Nike and HP (past success doesn’t guarantee future results), Microsoft’s turnaround under Satya Nadella, and the psychology of “averaging up” into winners like Google.

Key Topics Covered

• “You can’t see the future through a rearview mirror”

• Nike and HP as cautionary examples

• Microsoft’s turnaround under Satya Nadella

• “The best stock to buy may be the one you already own” (averaging up)

• “When even the analysts are bored, it’s time to start buying”

Timestamps

01:29 – Principle 1: rearview mirror thinking

02:13 – Nike (going direct, slowing growth)

06:18 – HP & innovation pressure

11:23 – Microsoft turnaround (Ballmer → Nadella)

15:52 – Principle 2: best stock may be one you own

16:13 – Averaging up & anchoring bias

19:40 – Google (buying again at higher prices)

21:46 – Social media narratives and contrarian thinking

23:57 – Principle 3: buy when analysts are bored

24:21 – Danaher & spinoff return distortion

28:16 – McKesson & boring businesses vs hype

30:33 – More boring winners

Resources Mentioned

The Value Spotlight Newsletter: https://einvestingforbeginners.com/value-spotlight-newsletter/

Have questions or want your story featured? Email the show at newsletter@einvestingforbeginners.com or comment below. Your feedback shapes the podcast!

Remember, invest with a margin of safety—emphasis on the safety. Have a great week, and we’ll talk to you next time.

Timestamps are generated by artificial intelligence, and are not 100% accurate depending on the platform used for listening.

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