The Three Most Dangerous Words in Investing Aren't What You'd Expect

Editor's note: It's frustrating to see a stock you were interested in but didn't buy take off. However, as Stansberry's Investment Advisory editor Whitney Tilson explains, letting that frustration dictate your future decisions can turn a small mistake into a big one. In today's issue, last published in DailyWealth in May 2025, Whitney outlines a better way to approach these "missed opportunities."

According to a Wall Street cliché, the four most dangerous words in investing are, "This time is different."

But I've found a three-word phrase that's uttered just as frequently... and is arguably even more dangerous...

"I missed it."

You've probably grumbled these words to yourself before, after you passed on a stock you were considering buying... and then watched as it marched to new high after new high.

The critical lesson here is that just because a stock has run up a lot, that doesn't necessarily mean it's too late to buy.

Today, I'll show you why this simple, three-word phrase can be so misleading...

Look Beyond a Stock's Price

In my decades in the markets, I've seen it time and time again.

Value investors tend to look in the bargain bin for beaten-down stocks trading at 52-week (if not multiyear) lows. They get a sense of satisfaction from getting a better deal than the guy who bought the same stock a month or a year ago.

It's a great strategy if – and this is a big "if" – you can correctly identify companies whose fundamentals will eventually turn around. The key here is to avoid value traps: the companies that never turn around, whose businesses (and stocks) keep declining and declining...

But what about stocks that never really fall out of favor – the ones that never end up in the bargain bin? Value investors often miss them.

Take Alphabet (GOOGL), for example...

In August 2004, the company (at that point still known as Google) went public at a split-adjusted $2.51 per share. By October, it had already more than doubled. A year later, it doubled again. And two years after that – in October 2007 – shares were trading at $18. Today, they're up to around $330.

Sure, it would have been great to buy shares right at the initial public offering. You'd be sitting on gains of more than 13,000% today. But even if you didn't buy on day one, you didn't miss it.

Heck, even if you had sucked your thumb for a year, watched the stock go up more than 260%, and bought shares in October 2005, you could have still doubled your money in only two years...

If you missed those early opportunities on Google, well, join the crowd. I, too, watched its shares continue to go higher and higher, wishing I'd established a position.

It would be one thing if I had done the work on it and concluded that the stock was outside my circle of competence (it wasn't) or was too expensive (it wasn't).

But that wasn't the case. I simply didn't do the work. Why? It wasn't because I was lazy. Rather, when I looked at the stock, it was usually trading at or near an all-time high, so I kept telling myself that "I missed it" and moved on.

If I had just bought what I knew was a great business at any of those points circled in the chart above, I'd be sitting on a multibagger today.

Let me give you another example. My friend Chris Stavrou bought shares of Warren Buffett's Berkshire Hathaway (BRK-A) back when Chris was a stockbroker in the 1970s.

He started buying it for his clients around $400 a share, even after it had risen more than 2,000% over the previous decade, because he didn't fall into the "I missed it" trap.

A decade later, he opened up his own hedge fund, Stavrou Partners. By then, Berkshire was trading at an all-time high of $1,800 per share.

So did he say to himself, "Wow, this stock has moved up a lot – I think I'll wait for a pullback" or "Drat, I missed it"?

No. He saw that it was a great company run by a brilliant investor, and the stock was still attractive at $1,800. So he bought it for his nascent fund...

Today, BRK-A shares are each valued at well over $800,000!

So learn this lesson well: Whether a stock is trading at a 10-year low or a 10-year high tells you absolutely nothing about whether it's cheap or expensive.

Though I sold it much too soon, I was smart enough to buy Apple (AAPL) when it traded for a split-adjusted $0.35 per share back in October 2000...

In the years that followed, Apple rolled out the iPod music player, iPhone smartphone, iPad tablet, Apple Watch smart device, AirPods headphones, and more.

It's no wonder Apple has been one of the best-performing stocks of all time. It now trades for around $340 per share.

October 2000 was a rare chance to buy a world-class stock before it rose roughly 97,000%... enough to turn every $1,000 stake into almost $1 million.

Some stocks trading at multiyear lows are horrible value traps that are headed to zero. And some stocks trading at multiyear highs are going to be spectacular winners going forward.

If you want to make money in the markets, don't fall into the "I missed it" trap...

Ignore where the stock has been, do the work, and make a rational assessment of where it is likely to go in the future.

Good investing,

Whitney Tilson

Editor's note: ChatGPT's debut in 2022 kicked off historic gains in stocks... and transformed names like Nvidia into market darlings. But if you think you've missed your shot to invest in AI, you're mistaken.

A new company has developed a chip that outperforms Nvidia's on every metric. Put simply, it has the potential to completely upend the market. And on October 28, Whitney is joining Jeff Brown from our corporate affiliate Brownstone Research online to share all the details... Reserve your free spot now.