How often do stocks become worthless?
"The only thing that makes a stock worthless is when the company goes out of business. Note that bankruptcy, by itself, does not mean the company is closing. It could successfully restructure its affairs and come out of bankruptcy with a better outlook. Being a small or unprofitable business may cause a company's to trade in the ""penny stock"" range, but there is still some value there. Since most dying companies will pass through the penny stock phase, you may be able to track down what you're looking for by finding companies who have been (or are about to be) delisted. Delisting is not death, it's just the point at which the company's shares no longer meet the qualifications to be traded on a particular exchange. If you find old stock certificates in your grandmother's sock drawer, they may be a treasure, or they may be worthless pieces of paper if the company changed its ownership and Grandma didn't know about it." Randomly selected stocks would probably become worthless at a similar rate of all businesses going out of business do.  I'm not sure why you'd randomly select a stock though.  Stocks in the S&P500 (or other similar index), or large-cap stocks probably become worthless at a much lower rate.
"Is evaluating stocks just a loss of time if the stock is traded very much? Not at all! Making sound investment decisions based on fundamental analysis of companies will help you to do decide whether a given company is right for you and your risk appetite. Investing is not a zero-sum game, and you can achieve a positive long-term (or short-term, depending on what you're after) outcome for yourself without compromising your ability to sleep at night if you take the time to become acquainted with the companies that you are investing in. How can you ensure that your evaluation is more precise than the   market ones which consists of the evaluation of thousands of people   and professionals? For the average individual, the answer is often simply ""you probably cannot"". But you don't have to set the bar that high - what you can do is ensure that your evaluation gives you a better understanding of your investment and allows you to better align it with your investment objectives. You don't have to beat the professionals, you just have to lose less money than you would by paying them to make the decision for you." "The value of a stock ultimately is related to the valuation of a corporation.  As part of the valuation, you can estimate the cash flows (discounted to present time) of the expected cash flows from owning a share.  This stock value is the so-called ""fundamental"" value of a stock.  What you are really asking is, how is the stock's market price and the fundamental value related?  And by asking this, you have implicitly assumed they are not the same.   The reason that the fundamental value and market price can diverge is that simply, most shareholders will not continue holding the stock for the lifespan of a company (indeed some companies have been around for centuries).  This means that without dividends or buybacks or liquidations or mergers/acquisitions, a typical shareholder cannot reasonably expect to recoup their share of the company's equity. In this case, the chief price driver is the aggregate expectation of buyers and sellers in the marketplace, not fundamental evaluation of the company's balance sheet.   Now obviously some expectations are based on fundamentals and expert opinions can differ, but even when all the experts agree roughly on the numbers, it may be that the market price is quite a ways away from their estimates.  An interesting example is given in this survey of behavioral finance.  It concerns Palm, a wholly-owned subsidiary of 3Com.  When Palm went public, its shares went for such a high price, they were significantly higher than 3Com's shares.  This mispricing persisted for several weeks. Note that this facet of pricing is often given short shrift in standard explanations of the stock market.  It seems despite decades of academic research (and Nobel prizes being handed out to behavioral economists), the knowledge has been slow to trickle down to laymen, although any observant person will realize something is amiss with the standard explanations.   For example, before 2012, the last time Apple paid out dividends was 1995.  Are we really to believe that people were pumping up Apple's stock price from 1995 to 2012 because they were waiting for dividends, or hoping for a merger or liquidation?  It doesn't seem plausible to me, especially since after Apple announced dividends that year, Apple stock ended up taking a deep dive, despite Wall Street analysts stating the company was doing better than ever.  That the stock price reflects expectations of the future cash flows from the stock is a thinly-disguised form of the Efficient Market Hypothesis (EMH), and there's a lot of evidence contrary to the EMH (see references in the previously-linked survey).  If you believe what happened in Apple's case was just a rational re-evaluation of Apple stock, then I think you must be a hard-core EMH advocate. Basically (and this is elaborated at length in the survey above), fundamentals and market pricing can become decoupled.  This is because there are frictions in the marketplace making it difficult for people to take advantage of the mispricing.  In some cases, this can go on for extended periods of time, possibly even years.  Part of the friction is caused by strong beliefs by market participants which can often shift pressure to supply or demand.  Two  popular sayings on Wall Street are, ""It doesn't matter if you're right.  You have to be right at the right time.""  and ""It doesn't matter if you're right, if the market disagrees with you.""  They suggest that you can make the right decision with where to put your money, but being ""right"" isn't what drives prices.  The market does what it does, and it's subject to the whims of its participants." Well first of all, they clawed back 75 mln of those bonuses paid out, so they really didn't get paid that money.  Second, not every executive, not even probably more than one executive, was even aware this was happening. There is one who **might** have known it was happening, but the reality is that a lot of these decisions and plans are implemented several levels down from the executive team. The executives do not get involved in day to day shit typically.  Third, those bonuses to executives are paid out in stock options. Stock options glean their value from the price of the stock. If the stock price goes down, then their bonuses lose value or become worthless, essentially meaning that they get reductions in pay or no bonus when the stock price goes down. So if the scandal had no affect on the stock price, why wouldn't they get paid their bonuses? The stock is the best indicator of the public's reaction to the entirety of the bank. If employees are more productive, then you need less of them to produce the same amount as they did before. Companies want constantly increasing demand for their products so that their value does not decline as their growth and output increases. If companies do not increase pay with productivity, then no one can afford to buy up the increase in products and they become worthless. What a pointless list!  It's ranked by total short interest outstanding.  That's completely meaningless.  For instance, a $1 billion company with $1 billion in shorts (meaning the market thinks it's bankrupt) would be ranked much better than a $100 billion company with $1.1 billion in short interest.  tl;dr:  pure and utter bullshit "That article, like almost any article written by a non-expert and quoting only ""research"" from lobbying groups, hugely misses the point. The vast majority of orders that end up being cancelled are cancelled as a standard part of exchanges' official market-maker programs. Each exchange wants you and me to know that it has liquidity -- that when we go to buy or sell some stock, there will be someone waiting on the other side of the trade.  So the exchange pays (via lowered fees or even rebates) hundreds of registered market makers to constantly have orders resting in each product's order book within a few ticks of the current NBBO or the last trade price.  That way, if everyone else should suddenly disappear from the market, you and I will still be able to trade our shares for a price somewhat close to the last trade price. But market makers who are simply acting in this ""backstop"" role don't actually want to have their orders filled, because those orders will almost always lose them money. So as prices rise and fall (as much as tens of times per second), the market makers need to cancel their resting orders (so they don't get filled) and add new ones at new prices (so they meet their obligations to the exchange).  And because the number of orders resting in any given product's order book is vastly larger than the number of actual trades that take place in any given time period, naturally the number of cancellations is also going to hugely outweigh the number of actual trades.  As much as 97% to 3% (or even more). But that's completely fine! You and I don't have to care about any of that.  We almost never need the market makers to be there to trade with us.  They're only there as a backstop.  There's almost always plenty of organic liquidity for us to trade against.  Only in the rare case where liquidity completely dries up do we really care that the registered market makers are there.  And in those cases (ideally) the market makers can't cancel their orders (depending on how well the exchange has set up its market maker program). So, to answer your question, the effect of standard order cancellation on a stock is essentially none.  If you were to visualize the resting orders in a product's book as prices moved up and down, you would essentially see a Gaussian distribution with mean at the last trade price, and it would move up and down with the price.  That ""movement"" is accomplished by cancellations followed by new orders. P.S. As always, keep in mind that your and my orders almost never actually make it to a real stock exchange anymore.  Nowadays they are almost always sent to brokers' and big banks' internal dark pools.  And in there you and I have no idea what shenanigans are going on.  As just one example, dark pools allow their operators and (for a fee) other institutional participants access to a feature called last look that allows them to cancel their resting order as late as after your order has been matched against it! :( Regarding the question in your comment ... If Alice is sending only bona fide orders (that is, only placing an order at time T if, given all the information she has at time T, she truly wants and intends for it to be filled) then her cancellation at a later time actually adds to the effectiveness of and public perception of the market as a tool for price discovery (which is its ultimate purpose). [In the following example imagine that there are no such things as trading fees or commissions or taxes.] Let's say Alice offers to buy AAPL at $99.99 when the rest of the market is trading it for $100.00.  By doing so she is casting her vote that the ""fair value"" of a share of AAPL is between $99.99 and $100.00. After all, if she thought the fair value of a share of AAPL was higher --  say, between $100.00 and $100.01 -- then she should be willing to pay $100.00 (because that's below fair value) and she should expect that other people in the market will not soon decide to sell to her at $99.99. If some time later Alice does decide that the fair value of AAPL is between $100.00 and $100.01 then she should definitely cancel her order at $99.99, for exactly the reason discussed above.  She probably won't get filled at $99.99, and by sitting there stubbornly she's missing out (potentially forever) on the possibility to make a profit. Through the simple act of cancelling her $99.99 order, Alice is once again casting a vote that she no longer thinks that's AAPL's fair value.  She is (very slightly) altering the collective opinion of the entire market as to what a share of AAPL is worth.  And if her cancellation then frees her up to place another order closer to her perceived fair value (say, at $100.00), then that's another vote for her honest optinion about AAPL's price. Since the whole goal of the market is to get a bunch of particpants to figure out the fair value of some financial instrument (or commodity, or smart phone, or advertising time, etc.), cancellations of honest votes from the past in order to replace them with new, better-informed honest votes in the present can only be a good thing for the market's effectiveness and perceived effectiveness. It's only when participants start sending non-honest votes (non bona fide orders) that things start to go off the rails.  That's what @DumbCoder was referring to in his comment on your original question." "I bought 1000 shares of Apple, when it was $5. And yet, while the purchase was smart, the sales were the dumbest of my life.  ""You can't go wrong taking a profit"" ""When a stock doubles sell half and let it ride"", etc.  It doubled, I sold half, a $5000 gain. Then it split, and kept going up. Long story short, I took gains of just under $50,000 as it rose, and had 100 shares left for the 7 to 1 split.  The 700 shares are worth $79,000. But, if I simply let it ride, 1000 shares split to 14,000. $1.4M. I suppose turning $5,000 into $130K is cause for celebration, but it will stay with me as the lost $1.3M opportunity.  Look at the chart and tell me the value of selling stocks at their 52 week high. Yet, if you chart stocks heading into the dotcom bubble, you'll see a history of $100 stocks crashing to single digits. But none of them sported a P/E of 12." In fact markets are not efficient and participants are not rational. That is why we have booms and busts in markets. Emotions and psychology play a role when investors and/or traders make decisions, sometimes causing them to behave in unpredictable or irrational ways. That is why stocks can be undervalued or overvalued compared to their true value.  Also, different market participants may put a different true value on a stock (depending on their methods of analysis and the information they use to base their analysis on). This is why there are always many opportunities to profit (or lose your money) in liquid markets. Doing your research, homework, or analysis can be related to fundamental analysis, technical analysis, or a combination of the two. For example, you could use fundamental analysis to determine what to buy and then use technical analysis to determine when to buy. To me, doing your homework means to get yourself educated, to have a plan, to do your analysis (both FA and TA), to invest or trade according to your plan and to have a risk management strategy in place. Most people are too lazy to do their homework so will pay someone else to do it for them or they will just speculate (on the latest hot tip) and lose most of their money.