What moves stocks in the long-term?

[zbojnik]

So do you just ask yourself, "What company does everyone think is hot"?

 

[dbphoenix]

Well I meant individual stock. Where do we find out what the earnings potential is or what people think about the future of the company? I looking at the quarterly summeries or the sec-10k papers but I couldn't find anything. But I think the economy also has an effect on an individual stock.

Well, if it's a matter of what people think . . .

In 1936, British economist John Maynard Keynes gave the best description of the stock market I've ever heard. He said stock market investors are like judges in a beauty contest. But the idea of this beauty contest is not to pick the prettiest girl, but rather to pick the girl that all other judges will think is the prettiest.

This simple metaphor is profound because it reveals the truth: For all of our study of the economy and companies, it is subjective perception -- not objective reality – that sets stock prices.

And it's perplexing because, as Keynes pointed out, all of the judges are fully aware of the true nature of the contest and act accordingly. Each judge knows that he's a player in an fabulously complex game of psych and double-psych, an infinite regress of figuring out what the other guy is thinking you're thinking he's thinking you're thinking he's thinking, and so on and so on ...

-- Don Luskin

As for what people think currently, Yahoo Finance provides a nice summary, a financial Cliff's Notes. Just enter the symbol in the search box at the top.

 

[blakpacman]

eps

 

[dbphoenix]

So do you just ask yourself, "What company does everyone think is hot"?

Depends on what you're looking for. This is a very different question than "What moves stocks in the long-term?" If you want to know what company everyone thinks is hot right now this very minute, look at those stocks which are moving the furthest the fastest. This, however, has nothing to do with the long term, even if the "long term" is next week.

 

[zbojnik]

I have not been paying attention to stocks lately but the thing I can think of is Tesla breakout from 38$ in April 2013. Everyone beleived the Electric Car will be the new thing? I think the bullrun is over for time being.

 

[zbojnik]

Depends on what you're looking for. This is a very different question than "What moves stocks in the long-term?" If you want to know what company everyone thinks is hot right now this very minute, look at those stocks which are moving the furthest the fastest. This, however, has nothing to do with the long term, even if the "long term" is next week.

Thanks.

 

[zbojnik]

Long term for me is D1 timeframe and up.

 

[dbphoenix]

Long term for me is D1 timeframe and up.

In that case, if you want to know what a stock is worth, just look at what people are willing to pay for it.

 

[zbojnik]

 

[rmorse]

Investors' aggregated perception of potential growth and change in value. Once stocks have moved to those levels, the perceptions must change before stocks will begin a new advance.

I agree. Perception is the key word. Reality comes in later.