In the short-term the stock market is a voting machine, but in the long run its a weighing machine. The market may ignore business success for a while, but eventually will confirm it. This analogy is a perfect way to first make the distinction that you are trading/gambling if you have a very short-term time horizon when making an investment. My recommendation is to look past the Wall Street quarter-by-quarter thinking and take a long-term approach- looking years ahead of what trends could occur. How does one do this? Easy look for a trend that could do well in the ups and downs of the economy; in Wall Street lingo secular growth.
Certain companies, such as industrial or oil companies, rely on the business cycle and the economy to grow their earnings. Nothing inheritably wrong with this, however, to enhance your returns as an investor you are better served to buy a company who can do well regardless of what point of the business cycle, or economy, is in. Secular growth occurs when something fundamental changes within a sector or industry, creating a wave of new demand. Two big ones easy to point out that occurred in the last few years was the growth of smartphones, Apple’s iPhone dominance; and secondly the rise of e-commerce- where Amazon has done very well. If you can spot these trends in their infancy you can do very well being an investor of these trends. Your conviction will be so profound a bear market won’t shake your confidence and allow you to stay the course- making a great return along the way.
Lastly, keep an open mind and look for trends that the majority of people will participate in. Meaning even if you don’t shop on Amazon but notice a lot of people in your inner circle use the service- the thesis of that secular trend may continue WITHOUT your participation. If you can do this objectively it will increase the likelihood you won’t miss that investment opportunity. Use your curiosity to spot trends occurring and do the homework how big of an opportunity this could be. Investing can be overwhelming and confusing, but it isn’t rocket science. No matter how much finance lingo someone uses to make them look smart. Good luck hunting!