Spurs went behind after just two-minutes when Younes Kaboul put through his own net, and then on 25-minutes Luis Suarez capitalised on more poor defending to double their lead.
And Sherwood admits that they cannot afford to give away cheap goals against a side like Liverpool.
"The game was finished after two mistakes," he told Sky Sports.
"You can make all the best planning but when you make mistakes so early, we thought the longer we stayed in the game the better for us, but it is finished in two minutes and we try and get back but they are a good side and they took a lot of belief from the first goal as everyone always does, the first goal is important but we were beaten by the better side today.
"Anyone can make errors it is just a shame we get punished as we did."
With Tottenham's defeat to Liverpool, it means their record against the top-four this season is one draw and seven defeats, with just two goals scored - and Sherwood admits it is not good enough.
"It is not good, obviously we have to put it right we have six games left - not against top-four teams, but we have to try and win those," he said.
"But we have to look at it - we don't seem to have problem with teams outside, perhaps it is a belief thing but a lot of these teams are better than us and today Liverpool were better than us."
Sherwood bore the brunt of fans' criticism after chants of 'Where is our manager?' were directed at him as he sat unmoved in the directors' box all game.
"They are entitled to have an opinion," Sherwood said of the away supporters' chants.
"I have sat up there for the last few games and got a better view but it is a learning curve for me.
"I am not shirking any responsibility. At 2-0 and the game going away at 3-0 I am going to learn more from my players from sitting up there rather than getting in trouble on the touchline.
"You have seen enough of me ranting and raving but I have to analyse it. Our performances against the top four have not been good enough."
Despite being destroyed by Liverpool over two games this season Sherwood still favours their rivals for the title.
"I would still go with Manchester City," he added.
"Liverpool have done a fantastic job, from last season to this is chalk and cheese. They are still in this race.
"The players they have in the final third are sensational. They run and graft. If they tighten up a bit I think they have a good chance."
Liverpool have transformed themselves this season to become title contenders and Sherwood is full of praise for Brendan Rodgers and the job he has done.
"They certainly look a different team, and Liverpool Football Club and brendan Rodgers take a lot of credit, but we have to pick the boys up," he continued.
"It is going to be a long week, as we play Monday [against Sunderland] but we have to dust ourselves down but we are sick tonight."
Sherwood insists he has not given up on fourth place, but admits it is now unlikely as they sit eight points adrift of Arsenal.
"It is never gone until it is gone but it is looking distant," he admitted.