Businessman Investor

Touching base with the rational business psyche of stock market investors

Tuesday, October 28, 2014

Quantitative versus Qualitative Approach in Stock Market Investing

Quantitative comes first. What's the point anyhow in
exhaustively delving into the qualitative aspect of the
company only to learn it's not even fundamentally earning
money consistently as a business?
Quantitative always comes first. Why? Because I don't want to waste my time going through the qualitatives of a company only to learn eventually, when I'm doing the quantitative part already, that its math doesn't add up, i.e. it's not a profitable business at all, not making any money consistently. What's the point, right?

First and foremost, why one is investing in the first place is to garner rates of return, and as a rational investor, it's only right to be conscious and aim for this. Only when do the numbers add up that one should start delving into the qualitatives of the company. Don't get me wrong. Looking at the qualitative side is important. I would say it's an important factor in mitigating risk. Because, personally, for me, while financial institutions would equate risk to volatility in order to quantify/measure it, i.e. the more volatile an investment is, the riskier it is--I am still a firm believer that volatility doesn't define risk (although I would agree that put into the more appropriate context, volatility indeed can be a risk factor).


The information presented here is for educational purposes only. Under no circumstances should it be construed as a recommendation to buy, sell, or hold any stocks. If you choose to use this information, you do so at your own risk.

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