FAQ

This is based on the Efficient Market Theory. It assumes that all available information is already in the stock market’s price. The Efficient Market Theory has always had flaws. An important fact it leaves out is investors’ emotions. Both professionals and everyday investors will be irrational in their buying and selling sometimes.

Only if we don’t do our homework. We have to read and understand the company we invest in. Then investing becomes strategic. Instead of a coin toss.

No. No one can time the market well. Some people will get lucky sometimes. But no one can do it daily, weekly, or monthly. It’s impossible.

Many stocks will drop in price. But the price drop may still leave that stock overvalued. Say a stock was selling for $60, and its real (intrinsic) value was $30. Even if the stock sold for $40, it would still be overvalued and risky to buy.

A group of analysts may believe a stock should be purchased at a certain price. Another group of analysts may agree on another price for the stock. I do not believe investing should be done by group consensus. Because for decades, less than 10% of money managers beat the S&P 500 Index.

Yes. People invest for retirement, college, vacations, a vehicle, renovations, a new home, and other items. But investors still need to have an investment strategy. They also need patience to see higher-than-average returns to fund those expenses.