The availability of stock price charts steer investor behavior towards visual analysis (technical analysis) such as trend investing (momentum investing). But of all parameters, the stock price is a very unreliable indicator of the growth prospects of a company. But the price graphs are just so God damn convenient.

You might see graphs of GDP, inflation and interest flashing by erratically in the media, but the graphs of stock prices reign supreme.. Historical price action is arguably the most influential statistic when it comes to investing. Have you ever thought about how the investment commentary would sound like without price graphs? Most commentary focuses on explaining the underlying reason for yesterday’s price movement. To sound more intelligent, some will refer to the P/E ratios to determine if a stock is cheap or not. But make no mistake, all eyes are on the price chart. At any rate, the “P” in P/E stands for price.

There’s nothing wrong about making a purchase decision based on price. It can be especially lucrative to day-trade mean reverting deviations. But since everyone else is doing it, the crowding effect distorts the accuracy of the price. The live stock market is like a live stock market -tourists pay the asking price while locals understand that haggling is a part of the shopping culture.

A Vanilla Equity approach would be instead to look for less opinion based metrics in the business of the listed company. A service company that has a growing client base or a production company that has increased sales doesn’t necessarily have a growing stock price – at least yet. But these indicators are great health markers for a company. As long as the company doesn’t go out of business, the stock price is likely not going to zero either. The upside is more unpredictable. The price peak rarely coincides with the peak of the business. Then again, if you make 431 million or 432 million, does it really matter? The important thing is not to make a loss simply because you blindly trusted the price action without looking at the underlying business.

Another thing to consider when looking at prices, is the currency. By default the price is always noted in a depreciating fiat currency. So depending on the currency, the graphical presentation of a stock price might be misleading. Your Turkish stock might have soared 25% the last year measured in the Turkish lira. But once you sell and convert the TRY to USD you will be in for a disappointment. Let’s not forget that the USD is no different. You can measure the S&P500 in gold instead of USD, and notice how the dollar depreciation unnoticably fools even the most high regarded market participants.

You can listen to earning calls and ponder what metric is the most decisive for a company. Then use that metric to construct your own graphs and perhaps compare it to competitors. Another strategy is to look up trending Internet searches. If you keep hearing about a new product on the street, you can confirm if the trend is wide spread by looking up how the brand is trending online.

Taking the time to construct your own graphs based on business metrics will likely provide a more reliable long-term trend than the stock price. If a company is solid and growing, the stock price will eventually follow.