Investors compare all day: stocks versus bonds, active versus passive, value versus growth, stock A versus stock B, and now versus later. Humans are quick to compare but not very good at it. Perhaps the most important comparison an investor must make, and one that distinguishes average from great investors, is between fundamentals and expectations.
Obviously, an orange has some intrinsic value. It is nutritious and tasty and can be used in a variety of ways. It has value on its own and has value as an ingredient. But what is that value? Fifty cents? Three dollars?
In 2016, the analyst, teacher, writer, and researcher Michael J. Mauboussin published a white paper called “Thirty Years: Reflections on the Ten Attributes of Great Investors.” In it, he outlines “the top ten attributes” that he believes “great fundamental investors share.”