HOW TO GET IT RIGHT

It's never just about the price. Let’s say you buy a house in a remote area for a relatively low price—say, $20,000. A few years later, the area undergoes rapid development: a toll road, shopping mall, new universities, and office complexes are built. The population quadruples, and now the house is worth $150,000.

The development is projected to continue, with a new business and financial district planned and the population expected to triple in the coming years. So, is $150,000 an overvalued price?

Obviously not. This is a common fallacy in the stock market as well.

Now, let’s say all the promised developments are delivered, and the house price rises to $450,000, but you have sold it earlier at 150K.

You decide to time the market, hoping the price will drop back to $150,000, remembering that was the fair value from before. A few years later, the price does fall to $150,000, so you buy the house thinking it will rebound to $450,000.

However, what you might not realize is that the fundamentals have changed. The area is no longer the top investment choice. Competitors have developed better projects in other locations, and the company is losing its competitive edge. To make matters worse, they can’t handle the rising maintenance costs, which results in negative income.

So, is $150,000 undervalued now? See, it’s never just about the price.