Level 1 Thinking "This company has a cool product. AI is trendy. The stock will go up." Everyone knows this. It’s already priced in. No significant upside.
Level 2 Thinking "Everyone sees the cool product, everyone knows AI is trendy, but what else are they missing? Is the market selling off on short-term noise while ignoring long-term necessity?" The goal is to find what the crowd has misunderstood. Be a contrarian.
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Why most investors miss the big winners:
They lack SECOND-LEVEL thinking.
Level 1 Thinking
"This company has a cool product. AI is trendy. The stock will go up."
Everyone knows this. It’s already priced in. No significant upside.
Level 2 Thinking
"Everyone sees the cool product, everyone knows AI is trendy, but what else are they missing? Is the market selling off on short-term noise while ignoring long-term necessity?"
The goal is to find what the crowd has misunderstood. Be a contrarian.