Hey Friend,
Last month, I made a rookie investing mistake.
I was having a bad morning, and I made an emotional decision to invest another $20,000 into PLS at $5.99 per share.
I guess there are worse things to spend your money on when you’re emotional lol.
But after sharing with you last week that PLS has been one of my greatest investments…
Why was this purchase a mistake?
Because investing is counterintuitive.
It requires you to understand both the psychology of the herd… and your own.
And most people get this backwards.
When a company’s share price has been smashed down and everyone hates it, it feels risky to buy.
But often, that’s when the risk is actually lower.
The market has already priced in fear, pessimism, and bad news.
On the flip side, when a company’s share price is flying and everyone loves it, it feels safe to buy.
But often, that’s when the risk is actually higher.
Because expectations are already sky high.
A simple example:
If there was a pair of shoes you really wanted and they suddenly went on sale for 50% off…
Would you buy them?
Of course you would.
But what if those exact same shoes were selling for 50% above the recommended retail price?
Probably not.
(Unless everyone had a pair and you didn’t)
When it comes to shoes, we understand value intuitively.
We know what a fair price looks like.
But in the stock market, there’s no price tag telling us what something is truly worth.
There’s no RRP.
What investors call this is intrinsic value.
And because we everyday people have never been taught how to estimate intrinsic value, we rely on emotion instead.
You see prices rising and assume:
“This must be a good investment.”
You see prices falling and assume:
“This must be a bad investment.”
So you buy high… and sell low.
Which is complete madness when you think about it.
When I bought more PLS at $1.30 in April 2025, I knew the market had become overly pessimistic.
Sentiment around lithium was terrible.
And because of that, there was less downside risk and far greater upside potential.
Last month at $5.99?
Completely different story.
PLS had become one of the best-performing stocks on the ASX.
Sentiment was near-euphoric.
And I fell victim to my own optimism and the optimism of the crowd.
I wasn’t buying based on value anymore.
I was buying based on emotion.
That’s the irony of investing.
Sometimes your biggest mistakes don’t happen when you’re fearful.
They happen when you feel confident.
Let me leave you with a great quote from Howard Marks that speaks to the thread we’ve been on today:
“Investment success doesn’t come from buying good things, but rather from buying things well.”
