Evaluating stocks useless?
"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."
"Question 2 Some financial institutions can provide a way to invest small amounts with low or no cost fees over a period of time (like monthly, weekly, etc).  For instance, a few brokerages have a way to buy specific ETFs for no cost (outside of the total expense ratio). Question 3 When someone says that investing is like buying a lottery ticket, they are comparing an event that almost always has at least a 99.9% of no return (large winnings) to an event that has much better odds.  Even if I randomly pick a stock in the S&P 500 and solely invest in it, over the course of a given year, I do not face a 99.9% chance of losing everything. So comparing the stock market to a lottery, unless a specific lottery has much better odds (keep in mind that some of these jackpots have a 99.9999999% of no return) is not the same.  Unfortunately, nothing truly safe exists - risk may mutate, but it's always present; instead, the probability of something being safe and (or) generating a return may be true for a given period of time, while in another given period of time, may become untrue. One may argue that holding cash is safer than buying an index fund (or stock, ETF, mutual fund, etc), and financially that may be true over a given period of time (for instance, the USD beat the SPY for the year of 2008).  Benjamin Franklin, per a biography I'm reading, argued that the stock market was superior to gold (from the context, it sounds like the cash of his day) because of what the stock market represents: essentially you're betting on the economic output of workers.  It's like saying, in an example using oil, that I believe that even though oil becomes a rare resource in the long run, human workers will find an alternative to oil and will lead to better living standards for all of us. Do civilizations like the Mongolian, Roman, and Ottoman empires collapse?  Yes, and would holding the market in those days fail?  Yes.  But cash and gold might be useless too because we would still need someone to exchange goods with and we would need to have the correct resources to do so (if everyone in a city owns gold, gold has little value).  The only ""safe bet"" in those days would be farming skill, land, crops and (or) livestock because even without trading, one could still provide some basic necessities." "For a newly registered business, you'll be using your ""personal"" credit score to get the credit.  You will need to sign for the credit card personally so that if your business goes under, they still get paid. Your idea of opening a business card to increase your credit score is not a sound one. Business plastic might not show up on   your personal credit history. While   some issuers report business accounts   on a consumer's personal credit   history, others don't. This cuts both ways. Some   entrepreneurs want business cards on   their personal reports, believing   those nice high limits and good   payment histories will boost their   scores. Other small business owners,   especially those who keep high running   balances, know that including that   credit line could potentially lower   their personal credit scores even if   they pay off the cards in full every   month. There is one instance in which the   card will show up on your personal   credit history: if you go into   default. You're not entitled to a   positive mark, ""but if you get a   negative mark, it will go on your   personal report,"" Frank says. And some further information related to evaluating a business for a credit card: If an issuer is evaluating you for a   business card, the company should be   asking about your business, says   Frank. In addition, there ""should be   something on the application that   indicates it's for business use,"" he   says. Bottom line: If it's a business   card, expect that the issuer will want   at least some information pertaining   to your business. There is additional underwriting for   small business cards, says Alfonso. In   addition to personal salary and credit   scores, business owners ""can share   financials with us, and we evaluate   the entire business financial   background in order to give them   larger lines,"" she says. Anticipate that the issuer will check   your personal credit, too. ""The vast   majority of business cards are based   on a personal credit score,"" says   Frank. In addition, many issuers ask   entrepreneurs to personally guarantee   the accounts. That means even if the   businesses go bust, the owners promise   to repay the debts. Source" "Honestly, I wonder if the other answerers aren't overthinking it. Their answers are detailed and correct, but what your coach may be saying is this: When you have bought a stock, on cash or margin, and you are watching it rise you are evaluating when you sell on the price of the stock you are seeing. In reality, you should look at the bid (price buyers will give you for the stock) and ask (price sellers will charge you for the stock) prices. If the stock is going up, odds are the price of the stock is very close to the ask price because it is purchases that are driving it up, but that's not what you're going to get when you sell. You're going to get something around the bid price. If the spread between the two is large (i.e. a volatile stock) this could be many cents or more lower than the ask price. Therefore, what your coach may mean by ""Selling on Ask"" is you're using the stock price when it's equal or close to the ask price to decide when to sell, instead of letting the stock peak and drop (when its price will approach the bid price) or letting the trailing bid offers catch up to your desired sell point and selling then (i.e. letting the stock point grow PAST your sell point, dragging the bid price up with it). Just a thought, but that sounds like a term a coach would come up with to mean selling and getting less than you thought you were going to from the sale. (I know it's a necro reply, but the Interwebs are immortal and people come via Google... I did)" I have heard that people say the greater earning means greater   intrinsic value of the company. Then, the stock price is largely based   on the intrinsic value. So increasing intrinsic value due to   increasing earning will lead to increasing stock price. Does this make   sense ? Yes though it may be worth dissecting portions here. As a company generates earnings, it has various choices for what it can do with that money. It can distribute some to shareholders in the form of dividends or re-invest to generate more earnings. What you're discussing in the first part is those earnings that could be used to increase the perceived value of the company. However, there can be more than a few interpretations of how to compute a company's intrinsic value and this is how one can have opinions ranging from companies being overvalued to undervalued overall. Of Mines, Forests, and Impatience would be an article giving examples that make things a bit more complex. Consider how would you evaluate a mine, a forest or a farm where each gives a different structure to the cash flow? This could be useful in running the numbers here. "The fallacy in your question is in this statement: ""The formulas must exist, because prices can be followed real time."" What you see are snapshots of the current status of the stock, what was the last price a stock was traded at, what is the volume, is the price going up or down.  People who buy and hold their stock look at the status every few days or even every few months. Day traders look at the status every second of the trading day.  The math/formula comes in when people try to predict where the stock is going based on the squiggles in the line. These squiggles move based on how other people react to the squiggles.  The big movements occur when big pieces of news make large movements in the price. Company X announces the release of the key product will be delayed by a year; the founder is stepping down; the government just doubled the order for a new weapon system; the insiders are selling all the shares they can. There are no formulas to determine the correct price, only formulas that try to predict where the price may go." I skimmed the paper rather quickly.  It's interesting I guess, but if you haven't taken a junior level college course in finance you'll be lost.    I fail to see any actionable advice from the article however.    It simply goes over how pretty much how most of how we perceive WACC, Betas, and Equity Premiums are wrong.  We are wrong in their actual definitions and we are wrong in how they are calculated.    I'm disappointed the author did not propose a solution though.  Even if he is right, you can't rewrite 'wrong' textbooks if you have no idea what the right answer is. I don't even know where to begin with how terrible this article is.  Fundamental analysis is about analyzing the profitability of a company, technical analysis is very much the crystal ball strategy that he makes out fundamental to be. This is just an advertisement for his garbage trading program Another one I have seen mentioned used is Equity Feed. It had varies levels of the software depending on the markets you want and can provide level 2 quotes if select that option. http://stockcharts.com/ is also a great tool I see mentioned with lots of free stuff.