Amongs the chaos that is the current market it's easy to get overwhelmed. Technical analysis, swirling rumors, any product that uses the term 'leverage' and a multitude of multi-strategy funds that invent their own words (Macro-algorithymic investing, anyone?) only adds to the confusion and make it easy to forget why the stock market exists in the first place.

The stock market was born out of the need for companies looking to raise money to get access to small time investors looking to invest. It serves both investor and investee and was (and still is) a meeting place to exchange goods (shares) for money. But the chaos that surrounds it now has become so complicated that many people don't understand what they are buying nor why they are really buying it. If your financial advisor buys a holding company focussing on destressed securities it is in essence you saying to your advisor "I don't know what I'm doing, buy something useful and take a cut", who then says to the holding company "I don't know what I'm doing, buy something useful and take a cut", who then says to companies in big trouble "You don't know what you're doing, let us buy you cheap and take over for you". This company that you've now just bought a piece of is a company in big trouble that could be in the business of ANYTHING, but you're trusting at every step of the way the next person knows exactly what they're doing. In essence you're investing in people to invest in other people. This is not a good way to invest.

Warren Buffet steered clear of the technology bubble at the end of the 90's because he didn't understand what he was buying. People were giving hundreds of thousands of dollars to these young, unproven entrepreneurs trying to develop young, unproven technology. What did Warren Buffet do? He went out and bought Dairy Queen, because he said "People love ice cream". That's why banks got hit hardest during the crash of 2008, because investors that had no idea what the banks were doing suddenly realized they sucked at whatever it was they were supposed to be doing (some who bought high and sold low still don't know what the collateralized debt obligation crises was all about). When you invest in a company you are buying a piece of that company, and you should use the same scrutiny you'd use when deciding whether to invest in your friends organic juice business.

So how does one do that? Well, for starters you can see it's a heck of a lot easier than trying to decide if Facebook or Groupon will be a good buy when they eventually go public. Facebook is being floated at being worth close to $50 billion dollars - with 750 million users that is suggesting that each user has a value of $66. That means they think of the course of your lifetime you'll generate $66 for the company - is that reasonable? I have no idea, and you know what? Neither do you. So facebook is probably not the best investment for someone like you.

But when you evaluate a company that sells a product; say like Jones Soda, you understand exactly where their money is going to come from and can do a much better job evaluating them. More importantly so can the rest of the market, which means you're going to get a fair price for them - you won't get great value, but you won't get screwed over, either, and for most investors this is a pretty good way to invest. The other advantage of buying a company producing a 'real' good or service is that when the market crashes though their stock may take just as big as a hit, the company itself is not less valuable to own and provides good reason for buying MORE of the stock.