Investing in Stock: Common Sense Analysis Part 2
Invest in what you are comfortable with
This has more to do with the psychology of investing than my first rule. I never invest in a business where my gut says its not perfect even if the investing community says it is: it is either over-priced, in an industry with a lot of fizzle and not a lot of substance (most of the tech industry in my opinion), in a country/region which isn't what the experts say it is (see my post on China- go to the country before you invest in it), its trendy (income trusts or hedge funds), I don't understand what it does exactly (see Nortel in the 1990's) or its being managed by management with a mediocre track record.
The temptation is to always go with the crowd but if it doesn't feel right, I don't do it (there are no style points in investing).
This has more to do with the psychology of investing than my first rule. I never invest in a business where my gut says its not perfect even if the investing community says it is: it is either over-priced, in an industry with a lot of fizzle and not a lot of substance (most of the tech industry in my opinion), in a country/region which isn't what the experts say it is (see my post on China- go to the country before you invest in it), its trendy (income trusts or hedge funds), I don't understand what it does exactly (see Nortel in the 1990's) or its being managed by management with a mediocre track record.
The temptation is to always go with the crowd but if it doesn't feel right, I don't do it (there are no style points in investing).
Labels: Investment strategy
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