The biggest lie in investing: “I understand the company.”

Hey everybody,

My toughts about the sentence: I understand the company/it in my area of confidence

You read a few books, bought the S&P 500, gained some experience in the market and you feel ready to buy your first stock.

How to find hidden gems?

Stay in your area of confidence: "Yes I understand the company," this must be the most told lie in investing. I see here and in private, people explaining to me that they truly understand Alphabet, uranium, car companies, gold, AMD, Nvidia etc.

A master of everything is a master of nothing.

There is nothing wrong with investing in big companies as they are often a safe bet, but pretending that you truly understand them is just a lie.

Example AI:

If I ask traders if they understand AI, most will say yes. So my follow up question is: Did your portfolio (at least the AI part) go up 400% to 600%?

If the answer is no, then something went wrong. Either they didnt understand AI truly or they dont know how to invest.

Because four years ago most tech companies (big ones) started to invest into AI, two years ago these companies announced that they would build data centers.

If you truly understood how AI works, all you need to do is buy the companies that build or produce parts for these data centers and thats it. RAM, storage, chips etc. No special hidden companies, just the already established companies.

Its that simple and somehow I dont know one person who did that. I myself have expertise in AI (it was part of my degree and I developed AI projects for my company) and I didnt see that because I am not an expert in this field. Sure some people bought them few month ago but they already went "viral" and it had nothing to do with their knowledge about it.

Even Warren Buffett doesnt invest in everything because he doesnt understand everything. There is nothing wrong with jumping on the hype train, but pretending that you truly understand the company is a lie.

I dont want to attack anyone but these Posts like:

Is Company XYZ truely underrated ?!

A stock went up 50% should I invest now ?

I bought comapny XYZ and it dropped 10% should I sell now ?

Bashing companys or roasting peoples ideas just because the stock price went down a lot and you are angry at them.

If you understand the business you wouldnt ask others…

This has nothing to do with Investing and should be deleted.

Cheers I had a blast here, time to say goodbye, wish you the best