Strategy 2: Focus on Important Factors, Filter out the Noise

We may heard a lot of rumors and news of the company. The fact is we still not sure that it’s true or false. The news for example could be false and misleading. The writers who create the financial news want the most exciting, scintillating and engaging stories possible; their success is measured by the size of their audience base and the reactions garnered. While this coverage can be entertaining, you shouldn’t view it as authoritative.

Most of what we have read and see in the media is noise. It’s not necessarily false, but it may be immaterial. Since the investor are going to own part of a company, we need to focus on the important economic factors affecting your company and its industry, not the hype around it.

Finally we still need to go back to the fundamental analysis to identify the profit margin and cash flow of the company, whether they can sustain and future growth potential. Do they improve the profit margin year by year or maintaining it? So check the financial performance history.

Strategy 1: Don’t “Pick Stocks,” Buy Great Companies at Great Prices