A company’s value can also be derived from how cemented it is within our daily routines
“A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.”
— Benjamin Graham, The Intelligent Investor, Revised Edition.
Some of us are looking for opportunities within this chaos. During times of great pessimism, there are hidden opportunities. However, just because something looks like an unpopular opportunity you should still be wary.
If you’re new to investing, there are many resources you should use before investing your first dollar into a brokerage account. Of the hundreds of timeless principles that experts have provided to the commercial investor, two pieces of advice that I regrettably didn’t listen to when I started investing is this:
- Don’t invest in anything that is posted as a hot tip, because if you’re reading it on a publication the value will be inflated by the time you make your purchase;
- Know what the company is about before you invest your money.
One of the best ways to choose an individual company to invest in is to have a deep understanding of it. A good place to start developing this understanding is by considering how the company fits into your daily routine and more importantly, how it fits into your culture.
How often is the company discussed in the news? How long has it been operational? Do you know anyone who works at the company? What have they said about their experience working there? Is that company the only one that you use or do you also interact with its competition? All of these questions can lead to even more questions about the company, which is what you want. The value of a stock can be derived not only from its earnings report, reading “between the lines” in the financial statements.
Is this a company that will be a part of the conversation in the next 20 years or will it fall by the wayside as another innovator takes its place?
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