An expression that I hear frequently is: “Things are never as bad or as good as they seem.” I see a lot of wisdom in this idea, and it certainly applies to the world of investments. All too often in the media, things are portrayed in extreme terms, as either perfect or terrible. This applies to individual stocks, to industries and to the overall economy.

Consider, for example, Netflix. In 2011, they made a decision to split their legacy DVD-by-mail business from their newer streaming business. In hindsight, the move makes sense. But they bungled the rollout. The result was that the company had to backtrack on the change. The CEO issued a public apology, which was promptly mocked by Saturday Night Live, and the company’s stock sank by more than 70% over a six-month period. But soon the crisis was behind them, and between 2012 and 2020, Netflix stock rose more than 5,000%.

This was a notable case, but there are lots of similar examples. The lesson: Don’t be too convinced when something looks completely hopeless-or when it looks absolutely flawless.