Doesn't the sharp rise of the stock market today, within opening minutes today, after a precipitous decline yesterday, decisively demonstrate that it's not based on any rational factors? Isn't all the explanations and prognostications by the so-called "experts" nothing more than blowing steam? Can anyone claim to know more about how the market's going to perform than anyone else (i.e. the manager of a huge Fidelity Fund compared to a dart throwing monkey)?
2007-12-12 01:59:34 · 5 answers · asked by Stephen L 6 in Business & Finance ➔ Investing
Kathryn: I think what you say makes alot of sense, I'm just not sure why we need "experts" to do this for us and take a hefty fee for doing so.
2007-12-12 03:37:37 · update #1
Looking at the market as whole on any given day is akin to a dart throwing monkey. BUT, the day traders have been chased out of the market for some time now. Most investors should have a long term goal (at least five years and preferably ten or twenty) and pick individual stocks after analyzing the particular company's strengths, weaknesses, and forward progress. They should have a mix of stocks in various sectors. And with dollar cost averaging, it really doesn't matter what a stock does on any given day as long as the individual trend is up. If it is not, then "Hasta la vista!"
2007-12-12 02:04:40 · answer #1 · answered by Kathryn D 3 · 1⤊ 0⤋
Your judgment on stock market inefficiencies is correct for the short-term. Over the short term the stock market appears to be driven by emotions, mass-psychology, and fear.
However, over the long-term the stock market does look a whole lot more rational. It really is an accurate reflection of business trends. The problem is that day-by-day the stock pickers are trying to look six-months into the future. Not easy!
2007-12-12 03:39:38 · answer #2 · answered by Dr. D 7 · 0⤊ 0⤋
On a day-to-day basis the stock market is influenced by moods and emotions. That's why it can swing wildly in one direction or another.
With enough research of a company and understanding of the market, it is possible to make reasonable predictions of long-term performance. But even then, you could be wrong.
2007-12-12 02:07:50 · answer #3 · answered by Stacia Z 3 · 0⤊ 0⤋
Mutual fund managers, like most intelligence investors, aren't focused on daily fluctuations. They're looking for long-term returns.
2007-12-12 02:29:30 · answer #4 · answered by Anonymous · 0⤊ 0⤋
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2014-04-09 03:37:13 · answer #5 · answered by sakill 2 · 0⤊ 0⤋