The mistake a lot of investors make is not conducting their investment work on the right “level”of analysis. Focusing on the right level of analysis is important to properly frame the investment decision and help to determine what information is actually relevant.  Many investors either focus on things that are far too “big” or they misplace their attention on the incredibly “small.”

The primary unit of analysis should be the business with some additional analysis given to the industry in which it operates. By focusing on the business as the unit of analysis, investors help narrow their focus to a manageable set of information that is most closely linked to the long term success of the stocks they own.

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