Distinction between picking good companies and picking good stocks!

"One of the more difficult hurdles we need to overcome is the natural tendency to want to choose only high-quality companies. There is certainly nothing wrong with this instinct, but we do need to understand that there is a distinction between picking good companies and picking good stocks. Our intuition tells us that although these may not be one and the same, they are certainly very close. Imagine, however, that everyone suddenly takes this view and invests only in “good” companies. The stocks of “bad” companies then suffer from a lack of demand and their prices drop precipitously. At some point, the prices become so low that the stocks are good investments even though the companies are not so great themselves. The point here is not that we should run out and buy stock in all the poorly run companies we can find. Rather, it is that we must acknowledge the possibility that a mediocre (or even poor) company may in fact be a good investment."

Distinction between picking good companies and picking good stocks!