I have zero knowledge about how the stock market works and how to evaluate companies and do some safe predictions. I've traded stocks in the last couple of years only based on my guts and haven't been really successful obviously. How can I learn to understand how stock market really works? Books, videos etc. ? TC: $140k YOE:4 #investments
You’re better off buying index funds. You’re unlikely to beat the market by somehow being better at “evaluating companies.” Current stock prices are already exactly that: the market’s estimate of the net present value of a given company’s future earnings.
If you are serious, you can start with reading Common Sense Investing followed by Intelligent Investor followed by One Step Up On Wall Street followed by an actual "evaluate company" (historically) with Security Analysis 2nd edition. Then realize no one really knows how to exactly evaluate the equity portion of the "Internet service". You can then read all of Berkshire Hathaway reports and watch all videos related to Templeton, Lynch, Buffett, and Munger. You won't be able to beat the stock market (you will most likely underperform while lowering risk) because all this is public knowledge. But if forward looking long real returns are 1-3%, maybe it is worth learning: stock market real returns have high correlation with an increase in the workforce and there are quite a bit of research papers that claim a mature nation is a nation that has low growth in the stock market. Most likely, if you know how to evaluate stocks long term, you would underperform or match the market ~80% of time. It's really hard to trust you would be part of the 20% vs a simple broad Index like VT ahead of time. But in that 20%, you can make good money. The hard part with stock pricing is evaluating "future growth" and trusting the balance sheets (look at Luckin Coffee recently). If you plan to lower risk, you are probably better off looking at government bonds and CDs. Learning to lower risk by forfeiting potential returns seem like the "harder way" to achieve a similar end result in the equity portion. After all, you can do all the math and decide Berkshire Hathaway will return 9% or whatever then see other stocks that you wouldn't touch due to balance sheets like AMC soar 100% in the same time period because govt picks winners and losers today. I doubt any sensible investor who are value investing would willingly invest in many companies today (and downsiding risk often comes with forfeiting returns). The one sector you can consistently beat (and quite easily) is the small cap value sector. Mostly because small cap value index (the one academia used to prove one can consistently beat the market) does not exist since it needs to be a much smaller cap than the current small cap value index offerings (and according to the research, you need to be active). Unfortunately, to get any real meaningful research, you need a professional in that field and it's hard to find a competent manager who doesn't want high fees in that sector: cause the market isn't scalable so the manager cannot profit without higher fees. For individuals looking to beat the market domestically, it might be the "easiest" sector. But trust me, the companies are smaller than small cap value indexes for a good reason: most straight out suck. Best risky way to maximize returns while underperforming the market is to leverage the market itself with low enough fees. Historically, a 1.4x to 2x is ideal. Now leverage on SP500 might work 95% of time, but when it busts, it can leave you broke. So there's that. But all this is mild compared to following r/wallstreetbets
Buy when you are scared and never sell.
Learn like the rest of us: lose 💩 tons of money.
Buy low, sell high.... Get that right more than 50% of the time and you are making money 😁
The key in the stock market isn't "making money". The key is to "outperform" the market in a risk adjusted basis. Cause why research if you would underperform a simple low cost index. "Making money" in stock market is almost guaranteed if you do your homework (even for retail investors). The problem is picking the ones that outperforms the market without taking insane risks.
Agreed to what u said, but I was just giving some beginner goals to someone new to the market. What you said is where we all need to be at long term
All the expert investors are on r/Wallstreetbets
Learn options first worry about stocks trading later
Agree with credit karma. Beating the market is a full time job. Indexing your savings is the way to go if you have some career other than finance
Diligently follow /wallstreetbets on Reddit.
Worst advice ever for a market newbie. 🤣🤣
Lol. I know 😂