Common stocks have one important characteristics and one important speculative characteristic. Their investment value and average market price tend to increase irregularly but persistently over the decades, as their net worth builds up through the reinvestment of undistributed earnings–incidentally, with no clear-cut plus or minus response to inflation. However, most of the time common stocks are subject to irrational and excessive price fluctuations in both directions, as the consequence of the ingrained tendency of most people to speculate or gamble–i.e., to give way to hope, fear and greed.
There are other attributes that make up a great company, too. And every investor places a different level of importance on the characteristics they feel are important; strong management, consolidated industry, high barriers to entry, attractive product, good culture, solid balance sheet, low obsolescence risk, etc. But among all these traits, one of the most […]
If you select good stocks, determine and specific that the price is within a range of fair value. If you select growth stocks determine and specific the round amount which the buyer at the current price is already paying for a growth factor as compared with it’s reasonable price if the growth prospects were only […]