What moves stocks in the long-term?

[dbphoenix]

Agreed.Intelligent Investor is a must read,as is the works of Buffet,Lynch and Oneil.

The OP is being taken down a path which has no relation to his original question.

OP's question is really fundamental in nature.

I agree with all three of your points. But it pays to make a distinction between the value of a company -- which is based on fundamentals -- and the value of a stock -- which is what traders are willing to pay for it. Those who fail to make this distinction start thinking that the stock is worth more than its current price, or that it's "too high", which is where the trouble starts.

Evaluating a company based on its fundamentals isn't what it used to be, which is why I stopped fiddling with stocks in the late 90s.

 

[BSAM]

And don't say supply/demand.

Okay...I won't say it.
But, if you know how to read a chart; guess what you are reading?

 

[zbojnik]

Okay...I won't say it.
But, if you know how to read a chart; guess what you are reading?

No one can trade successfully by just looking at chart.

 

[BSAM]

No one can trade successfully by just looking at chart.

Hmmm...Uh...okay, brother.

 

[BSAM]

(Sometimes points just ain't worth arguing.)

 

[dbphoenix]

No one can trade successfully by just looking at chart.

That's one of the chief distinctions between trading and investing. Investors have no reason to study charts. Traders have no reason to study annual reports.

It's difficult to puzzle out just what you're asking. It sounds like you're trying to figure out how to choose a company whose stock you can buy and hold for the longer-term. Unfortunately, there's a lot more to it now than reading analysts' reports and studying the fundamentals. The Motley Fool people found this out the hard way in '00.

 

[BSAM]

That's one of the chief distinctions between trading and investing. Investors have no reason to study charts. Traders have no reason to study annual reports....

Brother DB, any real investor is going to (also) consult the chart.

 

[dbphoenix]

Brother DB, any real investor is going to (also) consult the chart.

Depends on what you mean by "real" investor. The Motley Fool people don't bother with charts at all.

 

[Handle123]

It's that simple. If one wants to know what traders of whatever sort are thinking, just look at what price is doing.

Though technically it's more than just buying. Every transaction involves a buyer, even when price is plummeting. Prices rise because buyers are willing and sometimes eager to pay the ask.

I certainly agree with you, back in late 70s and early 80s I did all the hubbub of studying Revenue, earnings, debt, PEs, Insider buy/sell etc, but when you now see stocks go on up with zero earnings and "a hope and a dream", I just think many hardly even know what the underlying even makes and just see stock symbol. Few see the reasons of just trading dividend stocks that are optionable. I laugh when so many are going for a penny profit.

BUT not every seller has a buyer when market is plummeting at a decent price, I am always giddy when I have sold short Google and thing takes a dump, don't come down in dimes, bids dries up.

Ok. Then: how do you know people will continue to buy and when they will stop?

That's like asking if your heart will be beating in five minutes from now? Will you know if your heart be beating?

 

[dbphoenix]

I certainly agree with you, back in late 70s and early 80s I did all the hubbub of studying Revenue, earnings, debt, PEs, Insider buy/sell etc, but when you now see stocks go on up with zero earnings and "a hope and a dream", I just think many hardly even know what the underlying even makes and just see stock symbol. Few see the reasons of just trading dividend stocks that are optionable. I laugh when so many are going for a penny profit.

BUT not every seller has a buyer when market is plummeting at a decent price, I am always giddy when I have sold short Google and thing takes a dump, don't come down in dimes, bids dries up.

Actually, they do. They just have to lower their ask so much in order to get one. Watching a tick chart and seeing all the gaps can be very enlightening to a newcomer.

But as for your comment about the 70s and 80s, I sometimes wonder if it's best not to know all that. I doubt there are many modern traders who know that PEs used to reflect the amount of time it would take a company to "grow into" their earnings estimates. Now you have AMZN with a PE of 160+. Or that investors used to buy companies for the dividends. Seems the only strategy available to today's investors is buy low, sell high, but if they don't know how to detect a bottom, they don't even have that.