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What is the one key to investing that is the holy grail question that every investor asks themselves what is the very most important thing when it comes to investing i have that answer i want to share it with you guys today good day subscribers thank you so much for joining me on the financial education channel today so today’s video i actually had planned out for
Later in the week and today i was going to talk about the future economy and what the economy is gonna look like and what type of jobs are gonna be out there in 2050 but that video i moved back later in the week and move this video called key to investing up to today just because i think it is so vital for every investor to hear what i have to say today and for
Everybody that’s looking to invest what’s the one key that they should always follow though matter what and what it is it is staying in your circle of competence staying in your circle of competence what that basically means is staying with stocks in investing in industries that you have a good amount of knowledge on for example i’ll give you an example maybe you
Work for best buy maybe you’re a manager of best buy or something like that well in your circle of confidence you probably know a lot about electronics you probably know which electronics manufacturers or really move in their product you probably know a little bit about retail because you know if you’re then if you’re selling a lot of product that your company’s
Probably gonna do very well and if you know you’re getting a lot of market share of stolen you probably know where it’s from it might be from amazon or somewhere like that so you have a good amount of knowledge about electronics industry you have a good amount of knowledge about retail so your circle of competence will probably be investing in either retailers
Or investing in electronics type companies now the reason being is because you’ll be able to probably look at the sales are you moving a lot of apple products a lot of samsung products a lot of gopro proud it’s a lot of fitbit products you’ll be able to look at all these different things and you’ll have a knowledge better than most other investors will because
You’re like an insider you get to see this every day day in and day out and you understand what’s moving and what isn’t moving and how that helps is you will have confidence if you’re the stock you invest in goes down or flatlines you will have confidence because you have inside knowledge on that the company you invest in is doing a lot better than what other people
Think because most other people that are going to be invested in that stock or that company they’re not going to really know what’s going on they’re not going to have that inside track that inside knowledge that you do so you have an advantage over everybody in that respect and you’ll be able to get through those tough times because you really understand industry
And what not now let’s say let’s stay on this whole subject you work at best buy and whatnot you might not understand oil and gas as well and oil and gas prices and how old that works in commodities and those types of things because that’s really not inside your circle of confident incompetence unless of course you studied that for an extreme amount of time and
You have a huge amount of knowledge and maybe you worked on industry but most likely you’re not gonna have a strong feeling on where things are going and those take the industries you’re probably not going to have a strong knowledge on banking industry and what banks are gonna be the best to invest in those kinds of things now someone in the banking sector they
Probably will have a great amount of knowledge that’s inside their circle of competence same thing if you know an oil driller or someone that works high up for an oil company they’ll have a very strong knowledge on that in a very strong opinion that will be inside their circle of competence and that might not be inside your circle of competence so imagine being
A distributor for monster energy beverage back in like 2002 2003 2004 and for those of you guys who don’t know monster energy is like thirty five billion dollar market cap now forty billion dollar market cap they’re an energy drink company and very were launched in 2002 and they were a public company at that time he was known hanson’s natural beverages and they
Launched this product called monster energy and was like double the size of redbull can and not even a lot of people knew about redbull at back then but a few did imagine being a distributor back then in your you know you’re moving product to the gas stations and whatnot in every week their order or more in their order and more you could have been like wow this is
Really something i should probably look into this i should probably try to invest in them if i can because if you would invest it in monster back in 2002-2003 you know a year after they were launched and whatnot if you would invested only a couple thousand dollars you’d be a multi-millionaire today a couple thousand dollars into a multi-millionaire all for staying
Inside your circle of competence and all for investing and something you saw was going really well you would have made more money than you made in your whole career being a distributor all from an investment of a couple thousand dollars nevus the power of staying in your circle of confidence and all through that time the stock made a flatlined every now and then
It might have went down a little bit but you would have stayed strong in your belief because you were an insider because that was inside your circle of confidence your confidence would have been super high i hope this helped today guys the key to investing it is as simple as that it’s more important than anything it’s more important than a balance sheet and income
Statement the future of the company because if you have strong circle of confidence you’re gonna be able to see all those types of things and play them all out if you don’t have a strong circle of competence then you’ll have no confidence in the company thanks for watching guys subscribers i appreciate you every single day and if you haven’t subscribed and you love
To hear about business financial markets and personal finance and this is a channel for you to subscribe thank you guys and have a great day you
Transcribed from video
Key to Investing! | How to Invest in Stocks! By Financial Education
