All the macro gyaan in the world doesn't help us investors make money - only finding good companies does
31-Aug-2022 •Dhirendra Kumar
Over three decades of thinking, talking and listening about stocks, I'm still continually amazed by the sheer amount of conversation that revolves around esoteric economic factors that the ordinary investor should never pay attention to. Every day, analysts, economists, investment managers and other sundry talking heads appear on TV channels and newspapers and talk endlessly about interest rates, the fiscal situation, inflation rates, demographic shifts, quantitative easing or tightening and a lot more in the same vein.
All this is almost completely useless for you and me as far as making actual investment decisions about what stocks to buy and what stocks to not buy. Actually, all this gyaan that is distributed is not just useless, but worse than useless - it actually harms you as an investor. It harms you by distracting you, by taking attention away from the 'X Factor', which is what really matters in your quest to generate wealth from your stock investment.
And what's that? What is 'X Factor'. It's the simplest and most straightforward idea in the world: find good companies and invest in their stocks. Stock investing is about stocks. A discussion about actual investing must not be about these macro gyaan factors, none of which are under your control. It should be about revenues, margins, profits, market shares, product pipelines, management quality and all those things that actually decide the money-making potential of a company and therefore the wealth generated by the investors.
It's not about making economic predictions but identifying good companies
None of these gyaan factors are under your control. What the RBI or the Fed does to interest rates or what calamity befalls in some geopolitical arena is outside your ambit. Common sense dictates that it's better for investors to focus more on what they can control. You have control over when you invest, what you invest in, what price you invest at. You can control whether you invest in a great excitement in some bubble, or whether you invest systematically and gradually. You also have complete control over the money you are going to invest.
One of the less appreciated reasons why focusing on companies is better than on the gyaan factors is that the former tend to be fact-based while the latter are opinion-based. "It's much easier to BS at the macro level than it is to BS at the micro level." That's Nassim Nicholas Taleb (obviously!) explaining why bottom-up is way better than top-down. Bottom-up is reality, while top-down could just be empty talk, and usually is.
At the end of the day, equity investing is a bottom-up activity and not a top-down one. You make money by being right about companies and their stocks. In sharp contrast, being right about industries, sectors, national economies and even the global economy is of only negligible advantage, if any. This makes almost the entire gyaan conversation about economies of questionable value from an investment perspective. I do not mean, even for a moment, that questions of economic direction are not important - they are of the greatest importance to our lives and jobs and businesses. However, asking those questions does not help you as an investor.
So, what helps you, specifically? As I'm now fond of saying, that's where Value Research comes in. Specifically, that's where our Stock Advisor service comes in.
I'll give a quick primer for those of you who have not yet paid attention to this service: Value Research Stock Advisor is pretty much what the name says. It advises you on which stocks to buy, that is, it delivers good companies to you, exactly of the type I have described above.
Our research team maintains a list of stocks that you should invest in. You invest in them and make money. At any point, we also carry a shorter list of 'Best Buys Now' stocks for those who are beginning at that point. When any of the stocks are no longer investment-worthy, we advise you to sell them. What could be simpler?
The list is an input which you can use as is, or as a shortlist for further research, the tools for which we also provide you. One such additional tool is our Stock Screener, which is a unique system unlike anything else available in India, as well as detailed financials of every listed Indian company, not just the ones on our recommended list. Of course, our team also supplies you with updated guidance on all the stocks on our list, including the rationale for investing or disinvesting.
All in all, this is what you get:
So, stop paying attention to the gyaan in the headlines and on TV and head over to Value Research Stock Advisor and start investing in our hand-picked list of good companies.