They buy at what looks like the worst possible time, when profits are falling or losses are widening, and it looks like this will continue until the crashing stock hits zero. It’s the worst-case scenario. But the stock is undervalued, and it offers a wide margin of safety. It’s time to buy. As Klarman says, “High uncertainty is frequently accompanied by low prices. By the time the uncertainty is resolved, prices are likely to have risen.”14 They’ll also sell at what looks like the best possible time: profits are high and rising quickly, and it looks like this will continue forever. The stock
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