A single cent reflected on your electricity bill, net loss on your income statement, or even a big sack of coins given to you may give you a big wow on your face! But you may want to go back and check on the value of money you have received.
Where did it come from?
What am I supposed to do with such amount?
Is this from a legitimate source?
How am I supposed to interpret this?
A good and critical researcher of any fields must know how to measure and interpret the performance of the research topic.
The measurement and basis of the figures on everything you see must always be checked to assess the reliability of the sources and the methods performed to answer the research problems. Clarifying the construction of figures does not necessarily mean that you can never trust numbers.
It is just being well-informed on the constructed data. It’s always better to stay vigilant and know whether or the not the information is credible. Being fed with baseless data and statements can harm your knowledge on certain things. It is very dangerous wherein you are situated in a dilemma that you keep on accepting information.
Understanding the basis of data is just like mga chismis sa bayan. Saan nga ba talaga galing yang balita yan? Sino nagsabi? Paano mo naman nasabi? Numerical and qualitative fluency is a substantial yet critical skills for every investor and trader.
If you are easily swayed with the comments, opinions, and feedbacks on the stock market, you may want to consider on reflecting and going back with the initial process of gathering your data. Knowing the foundation and basis of data is not solely for the purpose of verifying and justifying the credibility of the results reflected upon charts or financial statements.
Evaluating the data can also direct you on evaluating the performance. At the same time, assessing your basis will assist you on identifying the rooms for improvement in your analysis and decision making. Also, biased and prejudiced statements are dangerous; these can lead you to poor literacy.
Understanding the market is more than performing both fundamental and technical analysis. Even countless of indicators used in reading charts are useless if you are deceived by baseless data all around the media or even among your peers.
Quantifying the value is not just about computations of your net sales, the Price-to-Earnings Ratio, checking on the last candlestick, or being informed with the 52-week low price of a stock. We just don’t want to gain money, to gain investment, or to be the top shareholders among all, we must know how can we justify the value of the money. Once we set this kind of mindset, we can build up a new discipline on accountability.
Numbers and figures can be interpreted in various ways. Metrics are difficult and challenging, but being focused on critically understanding the data will help you realize the value interpreted on customer behaviors, market structures, sustainability, profitability, the law of supply and demand, maximization of profits, and the like. The challenge in interpreting the data is also evaluating the methods selected in gathering the needed information.
