secret of investing. pure luck or any hints?

Question

how can you have above average return ,,it is very difficult because all available information about a company is quickly reflected in the stock price. To make an above average return, you must have information about a company or sector that other investors don't have or have a superior ability to interpret the available information. If other investors already have this information, the price of the company's stock will already reflect it.

Answer 1

You don't need information other investors have; you need education. Just like driving a car or doing fractions. It's all seems complicated until someone shows you what to look for and you learn it for yourself.

To succeed in investing is not not difficult. But just like many other things, it requires some effort and practice. Many of my friends had no clue how to invest a few years ago, but now, over 1/3 of them have quit their jobs and live off of investment income (soon to be more).

The key is education, discipline, and money management.

For instance, I don't need to know how good a stock is if I know that BIG money is flowing into it. Why? Because BIG money (institutions, pensions, mutual funds, etc) doesn't buy 10 or 20 shares, they buy hundreds of thousands. And they don't do it overnight. So as they put their money into a stock, the stock rises. I can get in ride the rise, and get out and move on to the next stock. That's just one of many ways to make money investing/trading.

Start with a book like "How to make money in stocks in good times and bad" by William O'Neill. It's widely available and it will give you an idea at how these things are possible.

You might also go to investools.com or optionetics.com. Both companies are good at what they do in teaching students how to make money investing.

If you have any questions, please let me know. Hope that helps!

Answer 2

People on Wall Street say "Buy on rumor, sell on news." But that is kind of hard for a person who is not in that loop.

In the case of an average Joe, I would say that if you hear terrible stock news in the media... wait one week and then buy. Hold on to those stocks for a number of months and when you keep hearing wonderful news on the stock market, wait one week and sell.

That will take you in and out of the market no more than 2 or 3 times a year.

Answer 3

You answered your own question. You have to have a superior ability to interprete the available information to achieve above average returns. No different from being a superior engineer, lawyer, or business manager.

Answer 4

Considering the highest paid mutual fund managers cant consistently give higher than average returns, I would say the good years are more luck. Success in stock investing is patience and perseverance.

Answer 5

There are people that are very good at predicting. However, they do get it wrong sometimes. The best advice out there is to pick a good diversified/balanced investment strategy and stick with it for the long haul. People do get lucky once in a while, but they have to assume significant risk to achieve the extraordinary results.

Answer 6

I don't know that it's luck nor that it's not luck.

Focus on something you know about and believe will come to pass. If your instincts prove to be sharp, you will be successful. If not, better to just go with index funds.

Most professionals are no better than the average person. However, the 'smart money' these days definitely looks at trends and adjusts their portfolios occasionally.

Answer 7

Pure luck.

Answer 8

Pure luck, however, if you are an investor/stockbroker etc. and do youre homework (looking at the company's past etc.) Try investing into mutual funds. Remember, the stakes are as high as the rewards

Answer 9

What you are referring to is the Random Walk Theory.

More info: http://www.investopedia.com/university/concepts/concepts5.asp

Answer 10

secrets? luck?

dave ramsey suggests mutual funds... they average 12%...

http://www.daveramsey.com/media/pdf/long_form.pdf