It is rightly said that the value of a stock is, essentially, a function of the number of dividends it can be expected to pay in the future. Thus, the current market price of a stock reflects the sum total of the investment community’s expectations about the company’s future dividends. So, when the expectations of the market for the dividends of the company turned out to be accurately true, then the value of the stock should not change over time.
Generally stock prices do change over time and they are constantly changing as people’s expectations for the underlying companies are in a permanent state of fluctuation. On a daily basis, various details are exposed that either improves or worsens the outlook for the companies in which we are investing.
There is difficulty in trying to predict the future profits of the entire economy. All day long every day, there is news being released that makes people either more or less confident in our economy. There is a functionally infinite amount of information involved, far more than anybody or even any computer program could keep track of.
How you can be a successful trader in the unpredictable market
You need to accept the fact that the market is not predictable over short periods. Who so ever is trying to tell you is simply trying to make a buck off your gullibility. You need to ignore them.
Apart from this, you must develop an investment plan that does not require you to be able to predict the unpredictable:
- Use low-volatility investments like CDs and savings accounts, for short periods of time.
- Use a mixture of bonds and higher-expected-return investments like stock-based, low-cost mutual funds for a long period of time.
You can also follow the instructions of technical analysts of Money Classic Research, who is the pioneer in offering accurate tips.