Maybe this is something I had to keep for the end of the year and then post it as "what I have learned this year". However I see no value in waiting and here it is.
One of the things I have learned lately is the importance of sectors analysis. It is now more than 5 years I am in the investing world and I am understanding this now, but it is never too late. So why is understanding the sectors so important.
If you look at the companies producing similar products, you will see that their stock prices move together - up and down. Of course it is not one to one, and that it is key thing. So it is very important first to understand the sector, the products in that sector, what is affecting those products, their characteristic and then you should deep dive into each company. When you do that you gain a whole picture for many companies, you start understanding which is good, which is bad, which is well managed, etc.
The second task is to understand each company in the sector. It is key to know which are the best and which are the worse one. Now I started grouping them by things like EBIT/Debt or Operating Margin.
It is important to know that after a bad period for the sector, the value of the good companies will raise faster than the bad ones because investors will pick the best ones first. Also it is important to pick
the ones who has small market cap. Those will be the winners. And lastly, when the wind change direction, no mater how good a company is, it will go down.