Stock Market Analysis

Subject = Free Stock Market Analysis , Technical , Fundamentals , Real time ,Automated , US , Nasdaq , MSEB , KLSE , ASX
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Category = Investment Stock Market Analysis

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Market Timing vs. Stock Picking

By stock stock analysis strategy ( stock analysis strategy)

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During a recent CNBC panel discussion, one of the participants highlighted the overwhelming impact of asset allocation on portfolio returns--a point that stock is both evident and often irrelevant. To suggest that your returns will be improved by timing the market correctly is reminiscent of Mark Twain's advice: Buy good quality common stock s and hold 'em stock until they go up. If they don't go up, don't buy 'em.

Without a crystal ball, most investors will diminish their returns by market timing. Legendary fund manager Peter Lynch has pointed stock out how quickly bull market s take hold and how easy it is to miss the early gains (which make the difference between success and mediocrity) .

This is not to say that stock market timing should be avoided. On the contrary, to ignore times of significant undervaluation and overvaluation in the stock market is foolish. It is just at these times, however, that the weight of stock evidence and expert opinion is biased in favor of the wrong decision. If you're unwilling to lean against the consensus and give fair measure to valuations, great opportunities can become great disappointments.

stock Between the extremes of highly overvalued and undervalued stock market s, stock picking is the more important skill—and, unlike market timing, one which can be done with consistent logic (since market s peak and trough stock at the irrational limits of greed and fear, market timing, by definition, can't be logical) .

Your focus should be on finding stock s which will outperform, those stock s whose underlying companies deserve stock the benefit of the inevitable doubts in times of extraordinary stress and extraordinary potential. These are the companies which have sustainable competitive advantages, good & great managements, and worthwhile valuations.

Determining absolute stock and relative values relies on several different measures. My favorite is the expected return on investment based on free cash flow, since the value of a stock is the present value of the stock cash received over time. The...

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