INVESTING: THE EFFECT IS THE EFFECT AND NOT THE CAUSE!
“ No problem can be solved from the same level of consciousness that created it.”
– Albert Einstein
You might be wondering what this quote has to do with investing success in the stock markets! Well, almost everything as we shall see...
Let us look at what exactly is the fundamental problem we are dealing with in stock investing. Simply put, the chief problem in investing is to try and figure out how prices of various instruments will behave in the future and positioning ourselves for the best result. Do you agree?
If you do, then we need to ponder about what will give us an edge in predicting and having a view on future stock prices. So, where should we make the effort?
When it comes to stock markets, most market participants seem to be barking up the wrong tree! If future price is the goal, just looking at current and past stock prices is hardly going to solve the puzzle. Yet, the whole market is just obsessed with knowing the 'day by day' and 'minute by minute' prices of stocks. Does it give an edge? None whatsoever!
You might ask 'WHY SO?' I invite you to go back and read the quote above :) So, just working on the level of price consciousness is not going to solve the riddle of future stock prices. Then what would give us an edge? We need to go to the next level. Over a long period of time, stock prices do not go up and down randomly. In fact, they are perfectly in sync with the performance and profit generated by the underlying business.
Investors who minutely track the fundamentals of a business (financials as well as operational details) are the ones looking directly at the 'cause' rather than the effect (stock prices). They are working at the 'next level' which gives them the edge in price performance. And that is what Inertia aspires to make available to its investors: sharp focus on the underlying business rather than just the stock prices...