Investing and Understanding What You Buy

"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

haramis@greekshares.com

http://www.greekshares.com

Ioannis - Evangelos (Akis) C. Haramis was born in Athens, Greece in 1951. Studied Business Administration, Marketing and Economics in Athens, Greece, in Chicago, ILL and in Boulder, CO (USA), as well as in Leuven, Belgium. He has been active in the stock markets since 1972 as an investor, stockbroker and consultant to individual investors and various funds. He is New Business Development Managing Director at a leading Investment Bank and publisher of http://www.greekshares.com

---

An Introduction to Offshore Investing

Once upon a time, offshore investment strategies were spoken of... Read More

Your Worst Enemy To Successful Investing - The Media

How do you make your investment decisions and where do... Read More

Emotions: A Traders Worst Enemy; Get Rid of Fear and Greed - Youll be Glad You Did

You hear it over and over and over in books,... Read More

Begging Your Trust in Africa

The syntax is tortured, the grammar mutilated, but the message... Read More

Investing: Do You Want To Make Money, Or Would You Rather Fool Around?

It always amazes me how much stock market investors resemble... Read More

Is Offshore Banking for You?

You've probably heard about people who keep their money offshore.... Read More

Introduction To FOREX

The Foreign Exchange Market, better known as FOREX, is a... Read More

The Dreaded Direct Question

(Please have a glass of water within reach before reading... Read More

Building The Foundation For Wealth

You wouldn't build your home on anything less than a... Read More

Why You Need To Buy and Sell Gold Coins (Part 2)

How to Collect Rare Coins For Fun and ProfitTime has... Read More

Types of Investment

The word 'investments' is one that most of us are... Read More

Raising Capital in Today?s ?New Economy?

We've helped a number of clients develop business plans and... Read More

Justify Social Security ... Dont Save for Retirement

It is a common question when investors review their retirement... Read More

Effective Advice For A New Generation of Investors

CATCHING A FALLING KNIFEOne of the most common mistakes made... Read More

Creating Wealth by Gearing Up

Gearing is where you borrow money to invest. As already... Read More

Bad News - Why The Financial News Media Can Cost You Money!

The communication innovations we have around us today like the... Read More

The Basics of Tax-Free UK Financial Spread Betting

Financial Spread Betting (or Trading) offers a tax free method... Read More

Volatile Range

The stock market fell sharply Thu and Fri before and... Read More

The Perfect Mutual Fund

The Perfect Mutual Fund is the one you build yourself!The... Read More

Four Key Components To Building A Trading System

Need some insight on what you should really be striving... Read More

Who Wants To Be A Millionaire?

I am sure you have probably read about the power... Read More

The Differences Betweeen the Wealthy and Everyone Else

I recently received an e-mail from a young lady who... Read More

Trading Systems

A trading system consists of a set of rules for... Read More

401(k) Plans

I've been in and interested in the stock market so... Read More

Angels, Are They Real?

They're real, but few survive. High risk investing is dangerous... Read More

Moving Average Convergence Divergence ( MACD ) Charts

The Moving Average Convergence Divergence charts, or MACD charts for... Read More

What Is A Fair Market Value, Really? If Youre Going To Trade, Be Sure Its Worth It!

I've been involved in online trading, specifically with stock and... Read More

Investing & Online Stock & Share Trading: Money & Risk Management - Atkinson Portfolio Planner (1)

This article was originally featured in Daryl Guppy's 'Tutorials in... Read More

It?s Not the Size of Your Bank Account

You might think that if you win the lottery or... Read More

Focus Your Investments on the Long Term

"All human power is a compound of time and patience!"... Read More

POOF goes your RRIF !

Some time ago I attended a seminar where participants were... Read More

5 Things To Know About The Stock Market

50% Of U.S. Households Invest In The Stock Market Individuals... Read More

Gold and Silver Maple Leafs Get New Packaging

Gold Maple Leafs and Silver Maple Leafs are receiving packaging... Read More