Comments on: What Are Stocks?

By: Jenna Quaranta@facebook

Jenna Quaranta@facebook — Thu, 12 Jul 2012 02:48:46 +0000

My question is, how do they decide how many stocks the company can sell? Like, how do they determine the limit? Let’s say company A has 100 stocks for sale for 12 dollars each, but company B has 1000 stocks for sale for 13 dollars each. What is the difference and what decides it?

By: stuffisthings

stuffisthings — Wed, 11 Jul 2012 15:33:44 +0000

@Rachel Hill@facebook As you should do. But that is six months and longer. Meaning, basically, that stock pickers — including mutual fund managers — can generate excess returns in the short term, but in the long term you’re better off with an index fund (or a dartboard).

By: Rachel Hill@facebook

Rachel Hill@facebook — Wed, 11 Jul 2012 15:26:03 +0000

@stuffisthings Oh, see, thinking of six months as “the long run” strikes me as ludicrous. I buy stocks I plan to hold for years.

By: stuffisthings

stuffisthings — Wed, 11 Jul 2012 14:41:02 +0000

@stuffisthings (This one may be a bit more readable.)

By: stuffisthings

stuffisthings — Wed, 11 Jul 2012 14:26:44 +0000

@Rachel Hill@facebook Not that long. “Results suggest that the pros
selection statistically outperforms the random selection only in the one-week period. Over a six-month holding period, the random stocks perform better than the pros recommendations.” For example.

By: Rachel Hill@facebook

Rachel Hill@facebook — Wed, 11 Jul 2012 14:17:32 +0000

@stuffisthings How long is your long run?

By: Rachel Hill@facebook

Rachel Hill@facebook — Wed, 11 Jul 2012 14:14:41 +0000

@beatricks@twitter Oh, oh! I want to write that article. But I can tell you without preamble that the fluctuations are often decided by people who are irritating and perhaps mentally deficient. The price you see for a stock on the ticker is often not what its actual value is. The price changes on a daily basis because of people who treat the market like a casino. No mystery there. However, if you have the business acumen to read up on a company and determine what it is they do and how well they do it, you can decide for yourself what the value of their business is. If, like me, you have some acumen but also know that you don’t know everything, you can listen to financial analysts who make a call on what a company’s real value per share is. For example, XYZ might be trading around $15 this week, but Standard & Poor’s says the stock is undervalued and really worth $20/share. Then you just have to decide whether to trust Standard & Poor’s, or if you want to read their five pages of reasoning, or if you’d rather listen to Citi Investment Research & Analysis or Morgan Stanley or somebody.

By: Rachel Hill@facebook

Rachel Hill@facebook — Wed, 11 Jul 2012 14:04:44 +0000

@themegnapkin and @redheaded&crazy Yes, reading is a very good idea. I have read enough to feel comfortable with my stock choices, and while I know I could potentially lose the money forever, I don’t act like a gambler when I’m picking something out. The thing is, yes, they’re risky, but you can absolutely mitigate the risk by knowing what you’re getting into. It’s not all fate, chance, odds, whatever that it’s often made out to be. I tend to invest in companies that are established, have shares valued at more than $10, and have reports by at least three reputable financial analysts.

By: beatricks@twitter

beatricks@twitter — Wed, 11 Jul 2012 05:09:44 +0000

This article would be just as informative and a lot less irritating without the long preamble calling people who don’t understand stocks “mentally deficient.”

On a stockier note, I think what is really mysterious about stocks is HOW that fluctuating value fluctuates. Who makes that call? How does that work? Write us a non-insulting article about that, please.

By: Morbo

Morbo — Tue, 10 Jul 2012 21:23:34 +0000

@Nick Mikail@twitter I am not falling into that fallacy. The value alue of Facebook does not change by the second, but the collective re-evaluation of facts, as well as the sway of individual expectations do.

There is an argument that the intrinsic value of an asset can never be truly reflected by a price.