Strategy 4: Don’t Lose Sight of the Big Picture
As individual investors, we hold our financial futures in our hands. However, the same isn’t always true for the companies we invest in. Occasionally, even a great company can be doomed if it does business in a dying industry.
Consider the typewriter industry of the early 1980s.
There were several solid companies making typewriters, but with the advent of personal computers from Apple and IBM, even the biggest heavyweights of the typewriter industry succumbed.
The lesson: as an investor you need to understand (and accept) how the bigger picture affects your investments. Not doing so can cost you dearly because the macroeconomic factors you overlook can take a big bite out of your portfolio.
The rule works the other way, too. Solid, undervalued companies who happen to be in the right industry at the right time can turn into spectacular performers.
