Moreover, if you buy the player based on a tournament, you are judging on a very small sample of games. Take Arsenal’s purchase of the Danish midfielder John Jensen in 1992. Weeks before, Jensen had scored a cracking long-range goal in the European Championship final against Germany. Arsenal’s then manager George Graham told journalists that Jensen was a goal scoring midfielder.
But he wasn’t. The goal against Germany had been a one-off. Jensen would go years without scoring for Arsenal. Over time, this failing actually turned him into a cult hero: whenever he got the ball, even in his own penalty area, the crowd at Arsenal would joyously shout, “Shoot!”. By the time Jensen left the club in 1996, he had scored once in four seasons. (Arsenal fans printed T-shirts saying, “I was there when John Jensen scored.”) Graham’s mistake had been to extrapolate from that single famous goal against Germany.
This is a common mistake in investing: to be overly influenced by something that has just happened. Among economists, this mistake is known as “availability bias”. When buying a player, you should assess him not on the last month but over his whole career. There is an obvious analogy for the stock market: if you are buying a company’s shares just when everyone is praising the company to the skies (for instance, when the chief executive is being feted as a hero on magazine covers), the stock is probably overvalued.
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