Investing in stocks... DO you know which mindset are you using?
September 3, 2009 8:19pm CST
I attended an investor fair a few weeks ago. And took a lot of notes while attending the various seminars that was available during that period. One that particularly caught my attention when I was clearing my notes was this... "When you invest in stocks, you have to learn how to read the company's financial report. And when you read the financial reports, you have to read it with the mindset of a business man, NOT an accountant!" It reminded me of the few pointers that Rich dad pointed out in his books. That we have to understand the health of a company when you are investing in stocks. And in order to see the health of a company, we have to read their financial reports. These financial reports are like the report card of the company. How they fare in the past year, and what are the resources available for them to perform in the coming year. Now the one thing that struck me when I read the above quote in my notes. When one is looking at the financial report, it is a bunch of numbers on a piece of paper. The speaker of the seminar said that when an accountant reads the same report, he may give a totally different analysis of the health of the company. Sort of like a specialist and a GP looking at you when you get sick. The businessman (Specialist) will see something that the Accountant (GP) cannot. But he did not elaborate much cos he wants you to attend his paid course to learn more. So it got me thinking. Same financial report. Different people in with similar knowledge on finance reading it have different views. My question, which I hope discussing with you will enlighten me, is this... What is the difference in the mindset of a businessman and that of an accountant when they both look at the financial report of a company? What does each of them look for? What does each of them disregard?
4 Sep 09
U are really serious into investing and investments huh?? hehe ^_^ Well, i'm not really into such things, but all i can say is that, a businessman is out for a profit, while an accountant is more like doing his job or fulfilling his duties, to make sure everything is in order.. For business man, profit and loss of company is important, as well as assets they have, and amount of loan, or outstanding loan to bank etc.. All these do somehow affect their shares if anything were to happen, and that if they dun have enough funds on their own to survive, it's gone case.. haha =D BUt an accountant, i dun think they care right?? All they do, is to balane the whole ledger.. lol =D
8 Sep 09
ha ha ha... brother, need to find ways to grow money lah. Inflation is eating up my salary faster than I can say increment! Just that of late, investing is the thing I am looking and exploring. That is why I am asking loads of questions. U are young, no family commitments, you should look at it too. No harm done exploring an alternative income stream.