The most successful investors know this:
Behind every stock is an underlying BUSINESS.
Over the long-term, the share price of a stock will follow the growth of its business.
As Benjamin Graham (the mentor of Warren Buffett) said:
“In the short run, the market is a voting machine but in the long run it is a weighing machine.”
To grow our wealth in the stock market, we have to focus on how the business is actually growing.
This is what top investors like Warren Buffett, Peter Lynch and Phillip Fisher focus their efforts on. They don’t follow the news and stock charts.
Instead of looking at NARRATIVES that management is painting, they look at the NUMBERS to see how the business is performing.
When you know how to read the financial numbers, you’ll be able to recognise great businesses worth buying…
From the hype stocks which will eventually crash!
This is the #1 skill investors need to grow their portfolio and build their retirement nest.
If you are planning to quit your job in 15-20 years’ time, you CANNOT afford to take huge losses from buying the wrong stock.
I know of people who have lost their retirement funds because they invested without knowing the numbers.
Here’s an example you might know:
Remember the Singapore company called Hyflux?
I found comments that investors made:
“I invested a significant amount of my retirement funds. I placed a lot of faith in Hyflux, and also because water is our strategic resource, I thought this (investment) would give us sufficient funds to cover our expenses, our medical needs, for the rest of our retirement years.”
Many lost 5-6 figures of their retirement sums because of buying the wrong stock.
This is NOT a joke.
Look at the money in your bank account today.
Can you imagine losing more than half of that sum overnight?
How much effort did you take to save up that amount? How many luxuries did you have to sacrifice? How much nonsense did you have to put up with?
If you want to grow your wealth in the stock market so you can retire early…
Then knowing how to avoid bad stocks and pick good ones is the #1 skill you need.
It is about learning the “old school” skill of VALUE INVESTING.
Over the long term, there is nothing I know that can outperform value investing.
There is a reason why so many investors like Warren Buffett, Charlie Munger, Peter Lynch and Philip Fisher stick to this proven method.
When combined with options, value investing can give you even better returns.
And here’s the surprising part:
The market right now is one of the best environments for value investing to work.
This is because a lot of stock prices have fallen from all time highs, bringing them much closer to their intrinsic value.
As Warren Buffett is often quoted:
“Be fearful when others are greedy, and greedy when others are fearful.”