Investing is a game of contradictions

What if I told you that in investing, black-and-white thinking is your biggest enemy? That the market can be overpriced… and still keep going up. That a stock can look expensive… and still be a bargain. That the safest-looking company… might be the riskiest bet on the board.

In this episode, we dive deep into the strange, frustrating, and fascinating world of investing contradictions, the kind that trip up beginners and challenge even the best investors in the game.

If you’ve ever felt stuck between what should work and what actually happens, this one’s for you.

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Nothing in this podcast can be considered financial advice. This is for educational purposes only. We may hold positions in the businesses discussed. Do your own research.

Transcript

 Investing is a Game of Contradictions

If there’s one thing that’s true about investing, it’s that two opposite things can both be true at the same time.

That might sound a bit philosophical, but hang with me for a second. You see, the market can be overpriced... and still go up. A company can look expensive… and still be a great investment. And sometimes, the biggest dangers hide behind the safest-looking businesses. 

In today’s episode, we’re diving into this strange but powerful truth that shapes how we invest, how we think, and how we make decisions when nothing is black or white.

Curious? Let’s jump right in.

Investing is so much more than just numbers on a spreadsheet. It's not just about financials, charts, and business models. Maybe the most overlooked piece of investing, the part that often decides whether we succeed or fail, is psychological.

See, companies change. Business models evolve. But people? People behave in remarkably similar ways, decade after decade. Greed, fear, overconfidence, doubt, they never go out of style. 

Let’s start with one of the first contradictions in investing: simplicity versus complexity.

There’s nothing simpler than investing. Really. You could set up an automated low-cost index fund, toss some money in every month, and not touch it for 30 years. Done. That’s it. It’s that simple. But at the same time… investing is arguably the most complex game out there.

It touches everything. Every person. Every decision. Every part of the world.

Investing is about making money, sure. But it’s also about solving problems, understanding people, tracking policies, interpreting financials, reading consumer behavior, and keeping up with psychology, patterns, math, history, biology, and science… all rolled into one.

In a way, it’s the study of everything. And because of that, investing can quickly become overwhelming. It’s also what attracts us to the world of investing. It’s about continuous learning. A never-ending puzzle. A game that rewards curiosity.

That’s why the real challenge isn’t in finding information, we have more information than ever before, it’s about managing it. Focusing on what really matters. Focusing on what moves the needle. The trick is making investing as simple as possible… but not too simple. Because oversimplifying is another trap in disguise.

Some of the best investors preach simplicity. Warren Buffett famously avoids complex businesses and focuses on easy-to-understand models. He only touches what he can truly understand within his circle of competence, even if this means missing potential multibaggers, like Google.

But at the same time, an oversimplified strategy, like blindly buying stocks with low price to earnings or price to book ratios, can lead to bad investments. A cheap stock isn’t always a good one. Sometimes, it’s cheap for a reason.

This is a classic "paradox of knowledge", the more you know, the harder it gets. The more information you have, the harder it is to filter out the things that really matter. We are being drowned in information, most of it completely useless. Now, this isn’t to say you should avoid content that’s just fun or entertaining. That has its place, of course. But try to balance your time. Because you only get one life, and you can only spend your time once.

Everything in life, including investing, is about balance. And that’s our north star at The Dutch Investors. We aim to only share what matters. Ideas and insights that are genuinely useful, or at the very least, offer a lesson you can walk away with. So if you're eager to grow as an investor, choose wisely. Follow the right people. Read the right books. Listen to the right podcasts. Use simple principles to filter investments and save your energy for the few ideas that truly deserve a deep dive. 

That’s exactly what we aim to do with The Dutch Investors Premium.

We know your time is limited. So we filter through hundreds of companies, dig through the noise, and focus on what really matters. We do the legwork, from financials to psychology, from business models to red flags, and give you our honest opinion. Not to tell you what to do, but to help you make better, more informed decisions for yourself.

Because not every stock deserves your attention. And not every idea is worth your time. We’re here to help you zoom in on the few companies that could actually move the needle for you.

In a world overloaded with complexity, we help keep things simple, but not too simple. Just clear, thoughtful insights… and more time for you to think, reflect, and invest wisely.

Because the world is already complex enough.

Your investing approach doesn’t have to be.

Alright, let’s talk about another famous investing contradiction. Cheap valuation versus a falling knife.

The phrase comes from a pretty vivid image: imagine a chef accidentally drops a sharp knife midair. If you try to catch it on the way down, chances are... you're gonna get cut. Badly.

Same thing with stocks.

When people say “don’t catch a falling knife” in investing, they’re talking about trying to buy a stock that's dropping fast, thinking it’s a bargain, only to watch it keep falling… and falling… and then fall some more.

You’ve probably heard the saying, “Be greedy when others are fearful.”
 It’s one of Buffett’s most quoted lines. And in theory, it makes total sense. When everyone’s panicking, prices drop. That can be the perfect time to buy.

But here’s the thing nobody tells you: Sometimes, when there’s blood in the streets… it’s not just fear. It’s a real wound. And jumping in too soon is how you end up catching a falling knife.

Let me give you a quick example.
Back in 2008, the financial crisis hit hard. Bank stocks were absolutely crushed. Now, if you had bought shares of some solid banks, like JPMorgan or Wells Fargo, you’d have done really well over time. But if you bought Lehman Brothers? Well… that went to zero. So not every “cheap” stock is a good one.

The same thing happened in 2022. Tech stocks dropped like crazy. And some, like Nvidia and Meta, came roaring back. But others like Peloton or Zoom just kept dropping because the problems ran deeper.

So what do we do with this contradiction?

It comes down to one thing: quality.

If a great company is getting sold off just because the market’s scared, that can be a golden opportunity. But if a company’s falling because the actual business is crumbling, that’s not necessarily a bargain. It’s a potential red flag. It’s a warning. Not to never buy falling stocks, but to be cautious. To understand why the price is dropping. And whether the business underneath still has legs. The difficult thing is, that only in hindsight you’ll know whether it was a falling knife or a  excellent buying opportunity.

Buffett’s trick isn’t just buying what’s cheap, like he used to call Cigar Butt Investing. Since he met his best friend and long-time partner Charlie Munger, he started buying great businesses at fair prices, not mediocre businesses at a discount. 

There’s a big difference between something being undervalued… and something being worth avoiding.

Alright, i’ll keep the next ones a bit shorter.

3. Holding Winners vs. Taking Profits

This one’s tricky, and it messes with almost every investor at some point. It messes with us too. Perhaps it’s the most difficult one of all.

On one hand, you hear “let your winners run!”, Don’t cut the flowers early or let compounders compound” And there’s real truth in that. Stocks like Amazon, Costco, Booking Holdings and Nvidia just kept going… far beyond what anyone thought possible. Buffet is known for saying ‘my favorite holding period is forever’. Which sounds lovely in theory, but only holds true for a very select group of companies.

Because, on the flip side… holding too long can hurt too. Many great companies have never reached the same highs they did before. Look at Cisco, Intel or BlackBerry, Peloton, Nokia or 3D systems.  Many had great products, great moats at the time, but one way or the other lost their edge. If you bought them at their peak, you would still be down on all of them. So holding forever sounds great, but in practice, it’s very difficult to decide when to sell or when to hold on.

So how do you know when to sell?

That’s the frustrating part. It’s easy to say, “I’ll sell when it’s overvalued.” If you had thought Amazon was overvalued in the late ‘90’s, you would’ve missed one of the best multibaggers of all time.
So what’s too overvalued? That’s the million-dollar question. Any , I’ll be honest, there is no golden, one-size fits all answer.

But here’s something that helps us. Have a framework. Something you hold on to, whatever happens. Also include a reason for  owning the company in your thesis. If it’s solely because of valuation, decide when you will sell. If you buy something because you think it’s going to be the largest company in the world, 25 years from now, perhaps you never sell, no matter the valuation. Create a framework and stick to it.

Because let’s face it, great businesses can stay expensive for years. 

If there’s one thing you take away from all of this, let it be this: investing is a game of contradictions.

That’s what makes investing so fascinating, and so humbling. It’s not a science experiment with fixed variables. It’s a constantly moving puzzle that blends numbers with narratives, data with emotion, and logic with a whole lot of human behavior.

Markets aren’t machines, they’re mirrors.
 They reflect our hopes, fears, greed, biases, and beliefs.
 And they test us over, and over, and over again.

The best investors, the ones we look up to, aren’t the ones who always get it right. They’re the ones who learn to live with the contradictions.
 Who develop a flexible mindset, but stay anchored by principles.
 Who simplify things, without oversimplifying them.

So where does that leave us?

It leaves us right here, trying to learn. Trying to grow. Trying to be just a little bit better than we were yesterday. That’s why we do what we do at The Dutch Investors.

We know this game is hard. So we try to make it a little easier. We help you focus on what really matters, filter through the noise, and spend your time on the ideas that are most worth it. Not just the stocks that are exciting, but the ones that might actually move the needle, the potential compounders or the ones overlooked by the market.

We don’t have all the answers, and we never pretend to. But we do promise to keep asking the right questions. To keep showing up. To keep learning alongside you and take you on this investing journey.

Because if there’s one last contradiction worth embracing… It’s that the best investors aren’t the ones who act like they know everything. They’re the ones who dare to admit they don’t know, but are curious enough to figure it out and learn.

Thanks for being on this journey with us.

Until next time, stay curious, keep learning and happy investing.