The stock market is a theme park where all emotions come out to play. Human emotions are unpredictable, making stock market movements unpredictable. Sure, very wealthy individuals and groups alike may have influence in the behaviour of a stock (think Money Monster), but to say anyone can predict the market with 100% accuracy is like saying the past can be changed by anyone.
Here’s the fact: You cannot control the market. Why? Because you can’t control how people will react to news, so don’t act like you know what will happen. It’s crucial to have a long range look at stocks – if you’re an investor that is. If you think investing means buying and selling on news and catalysts, nothing is further from the truth. TRADING is reacting on catalyst, something that will make the stock go one way or another, requiring split second timing. The big boys on Wall Street trade: they have all the charts, data, monitors, algorithms, information, and news. They have access to all of that plus they have a higher IQ than you (maybe…), they can think/reason and execute trades faster than you, and heck, they even have more money than you, a lot more. What makes you think you have a chance at playing their game?
The answer is this: You buy long in stocks with fundamentals because that’s the only sensible way for individual investors like me or you to have a fighting chance against the big guys with deep pockets and more knowledge that we will ever have access to.
In the wise words of Lao Tzu, “Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.”
And of course, this is only part of the whole picture. To get the rest of it, check out Wall Street Kitchen.