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Don't let crummy advice lead you to financial ruin

by , 14 August 2013

A couple weeks ago I had a conversation with a friend about his investments.

He said to me, “I never get the market right… About five years ago, my financial advisor loaded most of my investments into stocks and I took a financial beating during the crash.”

He continued, “Afraid of what was going to happen next, my advisor told me to pull out of most of the stocks I was invested in and invest my portfolio more conservatively… But because I did this, I barely made any gains on the rebound the market has made since.”

Since he was a friend of mine, I felt I had a duty to tell it to him straight: He's getting crummy investment advice.

And it's not because his financial advisor couldn't guess the direction of the market… But because he was guessing in the first place!

Here's what I mean...

You need a crystal ball to know what the economy will do next!
The economy is a dynamic system that no one man can predict exactly what will happen in the future.
There are just so many things to consider!
Whether it’s a country’s future exchange rate, the gold price, the rate of inflation, or even the number of people employed, it’s pretty much impossible getting all these factors right… especially on a global scale.
I mean, if you think about it, economists are notorious for getting things wrong… But honestly, who can blame them!
The reality is, there’s no point in trying to guess exactly what the economy will do next… Or to rely on some stranger’s economic forecast for that matter…
That’s a fool’s game which even if you happen to be right, won’t tell you exactly what stocks you should be investing in.
That’s why I like to skip the whole guessing game about where the economy is heading and rather focus on the profit potential of specific companies. And the only way to do this is to look at a company’s fundamentals…
How to really profit from the stock market…
To sum it up, stock market success is about analysing individual companies and not investing in some self-styled expert’s macroeconomic forecast.
By looking a specific company, you won’t need to look at the thousands of factors the economy has… You just need to focus your attention on a few things that will influence the profit potential of a company.
That means looking at companies which are doing all the right things…
I’m talking about companies which consistently increase sales, grow market share, pay down debt and increase their overall profits.
Companies that do all this will post great returns, no matter what the ‘experts’ broad economic outlook is.
To learn more about how to analyse a business properly so you can grow your investment portfolio, simply take a look at my new report, How to pick your first winning share.

Don't let crummy advice lead you to financial ruin
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