TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth Trivial matters If there is ever an event to make you realise either how little about the world you know, or how much completely useless information you do know, it's a trivia night. The most polarising fundraising event or social outing you can come across. While some people jump at the opportunity to impress with their vast array of knowledge, the others cringe at the idea of not knowing any answers along with having to be present for the ensuing scuffle that breaks out between the two know-it-all teammates who are both absolutely, 100% certain that their answer is correct. Success at a trivia night essentially comes down to your knowledge of the current and the past. What may or will happen from anytime after that is completely irrelevant. In contrast, where knowledge of the past can be considered trivial is the sharemarket. An investor should not be buying shares in a company because of what that company was able to achieve in the past, but instead because they believe in the future prospects of that company. Past performance is no guarantee of future performance, as the saying goes. The reason for this is that business models change, management teams become complacent, and competitors emerge. Blackberry is a famous example of a company that was once the world leader in its field, only to sink into silence just a few short years later. Other famous examples include Nokia, Yahoo and Blockbuster. Frustratingly none of us have a crystal ball, so predicting what the future will bring can be really difficult. However, forming an opinion of a company's future prospects does not need to be overcomplicated nor completely accurate. An assessment can be derived from activities as simple as reviewing what the company does and understanding how it generates its revenue, reviewing financial figures such as sales or earnings and seeing growth, and assessing the landscape within which the company operates - does the company have a competitive advantage in its field, does it provide a product or service that could be easily substituted for another etc. Conveniently, these same questions can also be applied to decide whether the time has come to sell the stock. You will never accurately predict the company's performance on any given day, and unlike a trivia night, having just a reasonably correct answer is enough. Just an informed opinion may be the difference between buying Apple versus the next Blackberry or Kodak. Hence, leaving knowledge of the past to trivia nights and expectations of the future to your share portfolio will likely deliver greater results than just bragging rights and a free round of drinks for the table. AW7391491 BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1, 462-464 Peel St, Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account. You are advised not to act on anything contained herein, or discussed as a consequence of the contents of this document, without receiving financial advice from a suitably qualified person such as a financial planner, lawyer or accountant. Follow us on Twitter @BaiocchiGriffin Find us on Facebook facebook.com/BaiocchiGriffinPrivate Wealth www.bgprivatewealth.com.au TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth Trivial matters If there is ever an event to make you realise either how little about the world you know , or how much completely useless information you do know , it's a trivia night . The most polarising fundraising event or social outing you can come across . While some people jump at the opportunity to impress with their vast array of knowledge , the others cringe at the idea of not knowing any answers along with having to be present for the ensuing scuffle that breaks out between the two know - it - all teammates who are both absolutely , 100 % certain that their answer is correct . Success at a trivia night essentially comes down to your knowledge of the current and the past . What may or will happen from anytime after that is completely irrelevant . In contrast , where knowledge of the past can be considered trivial is the sharemarket . An investor should not be buying shares in a company because of what that company was able to achieve in the past , but instead because they believe in the future prospects of that company . Past performance is no guarantee of future performance , as the saying goes . The reason for this is that business models change , management teams become complacent , and competitors emerge . Blackberry is a famous example of a company that was once the world leader in its field , only to sink into silence just a few short years later . Other famous examples include Nokia , Yahoo and Blockbuster . Frustratingly none of us have a crystal ball , so predicting what the future will bring can be really difficult . However , forming an opinion of a company's future prospects does not need to be overcomplicated nor completely accurate . An assessment can be derived from activities as simple as reviewing what the company does and understanding how it generates its revenue , reviewing financial figures such as sales or earnings and seeing growth , and assessing the landscape within which the company operates - does the company have a competitive advantage in its field , does it provide a product or service that could be easily substituted for another etc. Conveniently , these same questions can also be applied to decide whether the time has come to sell the stock . You will never accurately predict the company's performance on any given day , and unlike a trivia night , having just a reasonably correct answer is enough . Just an informed opinion may be the difference between buying Apple versus the next Blackberry or Kodak . Hence , leaving knowledge of the past to trivia nights and expectations of the future to your share portfolio will likely deliver greater results than just bragging rights and a free round of drinks for the table . AW7391491 BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1 , 462-464 Peel St , Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account . You are advised not to act on anything contained herein , or discussed as a consequence of the contents of this document , without receiving financial advice from a suitably qualified person such as a financial planner , lawyer or accountant . Follow us on Twitter @BaiocchiGriffin Find us on Facebook facebook.com/BaiocchiGriffinPrivate Wealth www.bgprivatewealth.com.au