A lot of people put off investing in the stock market because they’re intimidated by all the numbers that the financial media throws around.
GDP, unemployment, producer price index, manufacturing index…
They think that to be a good stock investor, you need to be able to understand all these macroeconomic indicators, analyze them and read the charts.
However, if you watch this video, filmed at the Platinum Mastermind in Costa Rica, Charles Mizrahi will explain why you really don’t need to worry about this kind of financial information when you buy stocks.
WHAT DO YOU NEED TO KNOW TO BUY A BUSINESS?
Imagine you’re buying a business locally. Maybe you’re buying a furniture shop that sells kitchen tables.
Do you need to know the GDP of Singapore? Do you need to know the unemployment rate of Canada? Do you need to know the producer price index in the United States?
Do those numbers make any difference at all to the viability of the business? Not really.
What you want to know is the amount of traffic in the local area, the demand for your particular goods and the competition in the local market. Is it in a convenient location for shoppers? Are there other furniture shops in the area?
DON’T LET THE FINANCIAL MEDIA CONFUSE YOU
When buying stocks, a lot of people seem to forget that they’re really just buying a business – or at least a cross-section of a business.
The financial media has an agenda to confuse you with a lot of information that is irrelevant to your investing decisions.
If you buy a local business, you don’t need to look at macroeconomic indicators like GDP, unemployment and producer price index. Yet, when buying stocks, people trip over these numbers and let them influence their investing decisions.
These macroeconomic indicators are important and they serve a purpose, but they are largely irrelevant to the small-time investor.
Never forget that buying a stock is just buying a business. When buying a stock, ask the same questions that you would as if you were buying the whole business.