Useless gyaan

All the macro gyaan in the world doesn't help us investors make money - only finding good companies does

- 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