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People often misjudge probabilities in daily life, largely because we rely too heavily on intuition. In the stock market, such misjudgments are common. For example:
Misconception: A stock that has already dropped 50% is unlikely to fall another 20%.
Reality: Stock price movements are like coin tosses—past results don’t affect future outcomes. If a company's fundamentals worsen, the probability of the stock falling from 50 yuan to 40 yuan (another 20% drop) could be higher than you think.
Would you like more examples of counterintuitive investing principles or mental models?
What other Buffett anecdotes do you know?
What’s the best lesson Buffet ever teach to you?
leave your comments to win tiger coins~
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