James Laughlin argues you should only invest in things you genuinely understand. He uses an Uber driver's investment tip as an example of what not to do, emphasizing that you need to know the problem a company solves and who benefits from it.
So easy. First and foremost, never invest a single dollar into something that you do not know, do not like and do not understand. I will never understand why people invest in stocks when they don't even know what the company does. I just invested in this company, I'm like, oh yeah? What does that company do? I don't know. Why did you invest in it? I don't know. The Uber driver said it was a good investment. So in other words you invested in it and you should have said I don't know why I invested in it. Invest in things that you deeply understand, but not just understand. Understand what problem that investment solves and for who it solves. Get really familiar with that. If you just did that with your investment strategy, you would only invest in things that you have deep knowledge of. Therefore your probability of success in those investments would go up dramatically because you're investing in something that you fully understand.
