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Home>UPDATE: These four fund managers' secret to success: Don't go with your gut on stocks

UPDATE: These four fund managers' secret to success: Don't go with your gut on stocks

UPDATE: These four fund managers' secret to success: Don't go with your gut on stocks

09/20/2017

By Philip van Doorn, MarketWatch

What investors need is 'second-level thinking' to avoid making mistakes

Are you the type of investor who goes with your gut or follows the herd? Or do you deliberate, considering a company from all angles -- even trying to find the flaws in your own thinking?

Taking the extra time can help you improve the performance of your investments.

This recent article by Charlie Bilello (https://pensionpartners.com/fast-food-slow-thinking/) provides plenty of food for thought, using two-year stock charts for McDonald's Corp. (MCD) and Chipotle Mexican Grill Inc. (CMG) as examples.

The two stocks have taken divergent paths in that span:

Hardly anybody predicted that Chipotle would suffer so badly -- and for so long -- from the food-safety problems that began in July 2015.

Remember that, before Chipotle's decline, many investors just "knew" that its restaurants represented the wave of the future for fast food and that stodgy McDonald's could never compete in food quality or service.

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