What is investing?
An investment operation is one which, upon through analysis, promises safety of principle and a satisfactory return. Operations not meeting there require are speculative. – Benjamin Graham in Intelligent Investor.
Investing is the act of committing Money or Capital to an endeavour (a business, project, real estate etc. ) With the expectation of obtaining an additional income or profit. – Investopedia
When you understand what is investing and why you are investing your money then you will clear about the answer. Here I am talking news about farm payroll data (If you are sitting in US, then yes it is important for you) Sometimes inflation number of any unrelated economy, mergers and acquisitions, new deal between some random companies etc. The extreme case here is Crude Price.
The simple reason behind it is this all things hardly affect the company in same amount and in direct proportion.
Let’s take an example. Recent OPEC meeting and the outcome. The issue was low Crude Price. As per the rule of economics, the supply was looking high respect to demand. So what expected is to reduce the supply. If that happened, then Price will be up. But if you don’t mind, remember when there was Crude Price around $100. That time also many companies was Making Profit. That is also a rule, high Profit attract Competitor a d thus make the rate low in long term.
Here I remember statement of Charlie Munger from recent Birkshire Hathaway Annual General Meeting. He mention that he never think about curude Price. And I am agree with that.
What matter for company is to grow by selling more product or giving service to more customers. Now how can that be related with crude Price if I am Invested in Bank and insurance companies? Sometimes I believe GDP growth is one of the non event for market. Why? What happened in past is GDP growth. You are buying share or Investing in Bank or Any other companies for the FUTURE PERFORMANCE. What can you do with it? As an Investor I only check past performance for checking what is pattern. Weather it is growth and any new addition in branch or weather the company is operating on its full potential.
When you realise it, then one more truth come into picture. Brexit was totally unimportant event for some companies. What is the meaning of Brexit? Exit from European Union. Now will that make BRITISH PEOPLES outsider of the world? Will they stop eating? Stop using cars? Don’t need medicine? NO. So why the issue? If after certain time they need to make new contract then that is happening everytime. It still the Equity showing wild swing on that day.
On the other hand, when you are investing, You are studying the company, and after the study, if you found that it is suits your financial Plan and right for whole planning, then you are investing. Investing is not one Day game. That makes many financial News unimportant for you.
Going to end it with paragraph from One upon wall Street written by Peter Lynch.
The basic story remain simple and never ending. Stocks aren’t lottery ticket. There is a company attached to every share. Companies do Better or they do worse. If the company does worse, its stock will follow. If a company does better, its stock will rise. If you own Good companies that continue to increase their earnings you will do well.
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