Gates: "Where are the computer science students" 4150

Straydog

A lot of activity in the stock market is influenced by what certain investment analysts say. For example, they may predict that a given company should earn a certain amount per share over the next quarter.

Just how accurate those predictions are or, for that matter, how the predicted values are determined is a mystery to me. Unless the analysts have crystal balls with which they can foretell the future, it's highly improbable that those predictions have much merit.

So, when the quarterly results are released (as they are right now for many companies) and the stock exceeds the predicted amount, people become enthusiastic and buy it. If it falls short, even by a penny, the stock is often sold off and the price goes down significantly.

Never mind the fact that the circumstances governing those earnings are legitimate, such as through, say, a natural disaster affecting the price of a commodity that the company requires for its product. The analysts say that the earnings are going to be *so much* and the stock had better co-operate or it'll be taken out to the woodshed.

That's one reason why many people see the stock market as being a giant casino. Personally, I don't pay much attention to what the analysts say about a stock as I'm more concerned as to the soundness of the company that issued it, how much debt it has, and whether it can pay its bills. From that I can estimate whether it's worth investing in.

You have to think long term in that business.

I'd venture to guess that

That's one reason I stopped buying stock in junior companies. Share prices often fluctuate dramatically through rumours. In order to make money under those circumstances, one needs to be constantly vigilant and have an ear to the ground in order to move at the right time. Even then, it's unlikely that one will ever get the timing right 100% of the time.

I subscribe to a certain investment periodical and I note many of the stocks that the different writers recommend or comment on. Often, when I do my analysis and look at the fundamental numbers of those stocks, I find myself wondering what planet they were on when they made those recommendations or comments. Rather than buying those stocks, one might be better off putting the same amount of money in a bucket and then dumping it out a window as the end result will be the same in both cases.