Course 104: What Matters and What Doesn't
You Buy Stocks, Not the Market
In this course
1 Introduction
2 Investing Does Not Equal Trading
3 Investing Means Owning Businesses
4 You Buy Stocks, Not the Market
5 Competitive Positioning Is Most Important
6 The Bottom Line

We've all seen the prognosticators on television, predicting where the market is going to go in the future. One thing to remember when listening to these market premonitions is that stock investing is about buying individual stocks, not the market as a whole. If you pick the right stocks, you can make money no matter what the broader market does.

Another reason to heavily discount what the prognosticators say is that correctly predicting market movements is nearly impossible. No one has done it consistently and accurately. There are simply too many moving parts, and too many unknowns. By limiting the field to individual businesses of interest, you can focus on what you can actually own while dramatically cutting down on the unknowns. You can save a lot of energy by simply tuning out market predictions.

We established in the previous lesson that stocks are volatile. Why is that? Does the value of any given business really change up to 50% year-to-year? (Imagine the chaos if the value of our homes changed this much!) The fact is, "Mr. Market" tends to be a bit of an extremist in the short term, over-reacting to both good and bad news. We will talk more about this phenomenon later, but it is nevertheless a good fact to know when starting.

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