Business Week Xer Misses Investing Strategy

Lauren Young of Business Week interprets investing in what you know as a strategy of investing in local companies. She writes about a study done that:

…investigated whether investors who buy stocks of local companies have superior information.

She concludes that individual investors don’t do well with this strategy.

Investing in what you know doesn’t mean buying stocks of local companies, it means buying stock only if you have studied the company or have knowledge from experience, and you understand what they do.

Where they are located has nothing to do with this strategy.

Half our portfolio is in mutual funds and I have little idea about the dozens of companies they hold – domestic and international.

The other half is in equities:

So, we’re invested in Botox, artificial joints, fashion (2), prisons, cigarettes, cancer, diagnostic testing, television stations, pets (2), and slot machines.

We’ve only made mistakes when we deviated from investing in what we understand. Otherwise we’re far better than average.

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Comments

Business Week Xer Misses Investing Strategy — 6 Comments

  1. I love what your are invested in. Just the mix of botox, artifical joints, prisons, cigarettes and slot machines…..oh what a picture.
    As for me after watching about 2 minutes of Squack on the Street this morning I think that any info on stocks should only be released once a week. I feel somedays listening to these guys that I am living in the world of chicken little…the sky is falling.

  2. Hi, care to guess which we have knowledge from personal experience and which we learned about? No. better not 🙂
    “squack on the street” LOL

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