Many people think that investing is something difficult. Impossible to understand and that makes it impossible for them to Make wealth by using the money.
Another extreme case is about the investors who blindly follows the ‘CRAZE’. They follow what is trend in the market. And as it is not difficult to make any trend in market, we always listen “This time its different.”
If you ask many investors why they bought any Stock some of them are not investor and if they want to hold it then they are doing it because of other people.
In-between all of this, the actual quality may be ignored.
Warren Buffett, with his business partner Charlie Munger, come up with simple tenet.
Invest only if you can understand what is it.
Simple meaning is if you try to understand it and you failed it. Then don’t INVEST.
Simple example is from my Life.
Pharmaceuticals Sector is something out of universe for me. As commerce student i know what is Credit Rating Agency, NBFC, BANK, Microfinance, Asset Management Company. But ANDA, I don’t know What is it? And there are many things. So when I decided to invest in Pharma company, I dont know how much is the importance of the company products so I performed badly.
But in banking and logistics, my Fevorite Sector. I know what is going on.
Yes. I appreciate this.
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