"There is nothing more frightful than ignorance in action!" Johann Wolfgang von Goethe (1749 - 1832)
I don't really know how cars actually work. Not really! I know how to drive them, but if you asked me how they work, I would not really know how to definitely explain it.
That small technical limitation on my part doesn't stop me from knowing whether XYZ Autos is a quality company or not. I don't understand the cars they make, but I do understand XYZ Autos. Moreover, that understanding is critical to making a decision about the value of their stock.
There are many good and objective ways to value stocks and improve your finances. These involve looking at various financial ratios. However, one of my simplest rules for investing is that you always must understand what you are buying!
This is by no means original with me. It is a basic part of fundamental analysis!
How deeply you must research in order to understand a company before you invest in it is a rather personal decision!
Some investors feel fine with just a general understanding, while others want to know everything there is to know about the company. I think that somewhere in between is perfect.
But you must know what makes a company different from others and whether that difference adds any real value or not.
Sometimes being different is not good ...
Buy what you understand for a reasonable price and you will be well on your way towards successful investing!
Copyright 2005 © I.E.C. Haramis
Ioannis - Evangelos (Akis) C. Haramis was born in Athens, Greece in 1951. Studied Business Administration, Marketing and Economics in Athens, Greece, in Chicago, ILL and in Boulder, CO (USA), as well as in Leuven, Belgium. He has been active in the stock markets since 1972 as an investor, stockbroker and consultant to individual investors and various funds. He is New Business Development Managing Director at a leading Investment Bank and publisher of http://www.greekshares.com
For instance, if the market moves up in the first... Read More
If you are interested in stock investing and the stock... Read More
About 6 years ago I started to notice that certain... Read More
Press releases are a means through which companies can keep... Read More
RETIREMENT PLAN CONSIDERATIONS are something every small business person needs... Read More
Many people hear "retirement" and think- what? 401K? Roth vs.... Read More
I've been involved in online trading, specifically with stock and... Read More
The American Jobs Creation Act of 2004 imposed strict new... Read More
For most people, there is a direct correlation between how... Read More
Denial is a ubiquitous psychological defense mechanism. It involves the... Read More
Let's face it, you're on a roll. After getting down... Read More
FOREX, the term for the FOReign EXchange market, is an... Read More
If it seems... Read More
Stock market trading is a fascinating activity.There are so many... Read More
What is an Angel Investor? An Angel is usually a... Read More
All this talk about Investing is encouraging lately. Over the... Read More
A Savings Incentive Match Plan for Employees plan, better known... Read More
This column has previously discussed "picturing the future that we... Read More
The forex market is what is called an international exchange... Read More
Young readers know that March 4th is the birthday of... Read More
Ever since the turn of the century, world stock markets... Read More
It is important to answer the following questions before you... Read More
As a trader, one of the key things that I... Read More
If you've ever listened to Warren Buffett talk about investing,... Read More
Shorts. Let's see. If there are shorts there must be... Read More
Tropical Storm Arlene formed as a tropical depression on June... Read More
Many investors think that investing in mutual funds is free.... Read More
Have you ever noticed how some words in the English... Read More
Many people have, at one time or another, taken some... Read More
AbstractA very slim minority of firms distribute dividends. This truism... Read More
In many respects, Singapore is the Switzerland of Asia.Begun in... Read More
Q: My youngest son wants to borrow $5,000 to start... Read More
Press releases are a means through which companies can keep... Read More
Are you ready to open your pathway to financial independence?Well... Read More
A trading system consists of a set of rules for... Read More
A way that investors get ripped off and in a... Read More
If you are interested in stock investing and the stock... Read More
The one thing I can think of that most affects... Read More
If you're like many Americans over the age of 55,... Read More
You've probably heard about people who keep their money offshore.... Read More
Over 80% of all individual investors lose money in any... Read More
A significant number of corporations that settled accounts in the... Read More
They're real, but few survive. High risk investing is dangerous... Read More
So you have learned how to trade the markets by... Read More
A SEP is a special type of IRA. Under a... Read More
Financial Spread Betting (or Trading) offers a tax free method... Read More
For instance, if the market moves up in the first... Read More
Here is a small summary of the three major approaches... Read More
There are a number of key reasons why individuals and... Read More
Okay, so I can tell you I have sat in... Read More
Investing Investing |
|