The great Warren Buffet is known to have said that we have to think of investing in the stock market as if we are going into business.
As businesses even the best ones usually do not grow in a straight line, its share price will be affected by its actual business performance, economic conditions etc.
Because of this, there is volatility (see post on volatility) in its share price and may cause inexperienced investors to worry.
Let's say I decided to buy Meralco Shares today, following Master Buffet's insight - I have gone into the power distribution business, the business will fail (hence lose money) if Meralco losses all its customers.
You and I are customers.
Can you imagine the day you will decide not to use electricity?
Is the customer base of Meralco growing? or contracting? (See post on possible reason why the stock market has an upward bias over the long term)
#acgadvice
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