📖John Neff
Probabilistic Thinking
Think in probabilities, not certainties.
Think in probabilities, not certainties. Every investment has a range of possible outcomes. Weight your decisions by the expected value of each scenario.
🏠 Everyday Analogy
📖 Core Interpretation
In Probabilistic Thinking, John Neff focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Expected value calculations guide rational decisions.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Ford Motor Turnaround (1982)
Neff bought Ford when it was deeply out of favor, trading at low P/E and high dividend amid recession and auto-industry pessimism.
✨ Outcome：Held for years as earnings rebounded; stock multiplied several times, validating his patient value approach.
2
Cyclicals After Recession Fears (1990)
During early-1990s slowdown, Neff accumulated beaten‑down cyclical stocks while many investors fled to safety, focusing on solid balance sheets and dividend support.
✨ Outcome：As the economy recovered, these holdings outperformed the market over subsequent years, rewarding long‑term patience.
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