"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 C. Haramis was born in Greece and he studied in Greece, USA and in Belgium. He has been active in the stock markets since 1972. Since 2002 he is New Business Development Managing Director at an Investment Bank.
Just about now everyone is confused as to which way... Read More
Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More
Stock trading can be a very profitable activity. You can... Read More
This article describes the model of a natural relationship between... Read More
The date October 13, 2000 will forever be embedded in... Read More
THERE'S SOMETHING TO BE SAID FOR standing firm in the... Read More
"There is nothing more frightful than ignorance in action!" Johann... Read More
It looks like we have now entered a new bull... Read More
Trading is a fascinating activity.There are so many layers to... Read More
Now where have I heard that before? I know. It... Read More
An insane person cannot evaluate an insane evaluation system.As you... Read More
Invest in the stock market for the RIGHT reason, using... Read More
Everything you invest in has risk so you want to... Read More
I read a comment by a forum member on another... Read More
There can't be many traders who haven't at least considered... Read More
One of the great "secrets" of successful people is discipline... Read More
You have a lock on your house. You have a... Read More
The broker told me not to sell because the mutual... Read More
Profitable day traders recognize that momentum trading is among the... Read More
One Saturday morning, while he was sitting at his computer... Read More
In November of 2000 when the NASDAQ was trading at... Read More
There are many important things you need to know to... Read More
It depends on your level of understanding of the market... Read More
Every day I see in the financial section of newspapers... Read More
There are so many kinds of work that needs to... Read More
Wall Street has been preaching for years and years to... Read More
You probably have been told that options are risky. Even... Read More
(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More
You should ignore analysts on TV, the radio, the newspaper... Read More
Has your broker been calling you recently with the "great... Read More
(1) Stock Market is Tough Place to Make Any Money... Read More
How do you invest? What do you really pay? At... Read More
Both the stock market and oil prices rallied recently, which... Read More
In a previously written article, we expanded the use of... Read More
The Bollinger Band theory is designed to depict the volatility... Read More
I continually hear from economists, talking heads, other market letter... Read More
Over the past few months, several investment professionals have brought... Read More
There is no question that the stock market is being... Read More
A 'stock option' is a contract between two parties giving... Read More
Any online investor / trader seeks an excellent off or... Read More
Never lose money in the stock market again. Yeah, I... Read More
Right now there doesn't seem to be any "gold fever".... Read More
Do you have a financial planner? Does one of your... Read More
Day trading is all about making buy and sell decisions.... Read More
A PEG ratio cannot be used alone but is a... Read More
With an insecure job market, overworked employees, insufficient retirement savings... Read More
Stock trading remains a very competitive field and the stock... Read More
The stock market often closes a week in the middle... Read More
Trading is a fascinating activity.There are so many layers to... Read More
Exchange Traded Funds (ETFs) are a group of passive index... Read More
Stocks & Mutual Fund |