My guess is that the majority of the "man in the street" investors rely, to quite a large extent, on advice from market 'experts', 'gurus', newsletters, etc...
They will also invest in various funds run by Fund Managers who rarely are able to beat, for example, the S&P500 Index. More often than not Fund Managers, in general, will spread the millions or billions of dollars available to invest, in a vast number of stocks.
In so doing the average result of such a large number of shares, spread across numerous sectors to counter "risk" and in so doing to "diversify", will gravitate to the average result of all those stocks. The better performers will be negatively affected by the poorer performers.
There are also many who indulge in the many components of Technical Analysis, i.e. chart patterns, technical indicators, etc.., etc...
That in itself, IMO, is not an altogether bad thing. However, IMO, one needs to FIRST look at the financial fundamentals of a company and come to a conclusion as to whether or not what Technical Analysis is telling you is in line with the Business and Financial performance of the company.
Because the way I see it, to put Technical Analysis before Fundamental Analysis is like putting the cart before the horse. It really should be the other way around.
So if the interrogation of the Financial Statements shows quality but the share price is trending down then that, IMO, could very well be an anomaly and possibly worthy of considering buying that company's stock when there is a confirmed reversal in the share price.
That's where the likes of Warren Buffett came up with the reference to Ben Graham's "Mr.Market", that this individual is there to "Serve" you, NOT to "Instruct" you.
And finally, to really get one's teeth into Value Investing and get the most benefit out of it, one has to be able to read and understand the contents and wherewithal of a company's 3 Financial Statements, viz. Income Statement, Balance Sheet and Cash Flow (you may want to get yourself a copy of "Warren Buffett and the Interpretation of Finacial Statements" by Mary Buffett & David Clark).
And that takes effort and a willingness .... maybe that's one of the reasons why you came up with so few "Traces of Interest in the Topic" ..... maybe too much like "hard work" ??? |
