Why This Warren Buffett Advice Is Fatal For Classic Graham Investors

It snared my father when he first started investing, and nearly lead me to quit picking classic Benjamin Graham stocks altogether.

It's a trap that a lot of people fall into and most never even realize the critical mistake they're making.

It has a huge impact on your portfolio. It can lead to many wasted years when you should be busily compounding your money instead. That's why, despite conventional wisdom, I ignore Buffett's no-called-strike metaphor.

Net Net Hunter has been up and running for nearly a year and I've been lucky enough to talk to an ocean of interesting people about investing. Every so often, however, I'll get a disturbing question from an investor who signed up to receive free net net stock picks and is considering full membership.

Benjamin Graham gave investors a tremendous gift when he developed this strategy decades ago. Net net stocks provide outstanding returns as a group. While the rest of the investing community is struggling to keep up with the market indexes, investors who follow Benjamin Graham's net net stock strategy typically beat the index, earning 25% or more per year on average over the long run.

Not all net nets are profitable, however, which is why I've developed a technique to screen out the less promising candidates. When it boils down to it, like everybody else, I want the best stocks in my portfolio.

But every time someone sends me an email telling me that there aren't any net net stocks anymore, or that their portfolio is fully stocked with American net nets, I get a little bit frustrated.

 Classic Benjamin Graham Investors Should Cultivate the Right Mindset

"Hi Evan, I was quite disappointed when I got your free net net stock pick this afternoon and saw that it was for an Australian company. Could you please send some great American net nets because those are the only ones I'd like to buy."

I recently got an email like this from one of our readers who had requested free net net stock picks. Unfortunately, this attitude is exactly the wrong attitude to take when it comes to investing. It doesn't matter if you're investing in growth stocks, low PE stocks, dividend stocks, or net net stocks -- expecting great investment opportunities to come your way when you want it, where you want it, is a great way to achieve marginal returns, or big losses.

Let me put this another way. Friedrich Nietzsche, a brilliant German philosopher from the 19th century, said that ideas come when they want to, not when you want them to. The exact same thing is true about good investment opportunities. It doesn't matter how eager you are to invest in a great investment opportunity in your home country -- that opportunity will come when it wants to, completely independent of you.

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