Quote: (02-12-2011 09:31 AM)hydrogonian Wrote:
Listening to this guys logic is a good way to lose your money.
To put it simply: Its about your information relative to the information held by the rest of the market.
If you think that you somehow know more than most full time investors about the actual value of a stock vs. its current price, then invest.
If there is no reason to believe that you have more information than the average investor, then don't invest. If you do invest regardless, then be aware that you are gambling in the truest sense, and likely with the house odds stacked against you more than would be in an average casino game.
It's really not all about information. I agree that the professional investor will always have better and faster access to information and research about a stock than the casual investor. And if you're day trading, then yeah, that kind of disadvantage will probably kill you. But if you're buying stocks and holding them for the long term, analysis of a stock becomes much more important than quick access to information. So the information disadvantage to the casual investor shrinks.
Yeah, full time investors on average underperform the market. 80% of mutual funds (run by full time, professional investors) underperform the market each year. But investment clubs, which are made up of mostly non-professional, casual investors, consistently outperform the market. A survey by the National Association of Investment Clubs a few years ago had the average investment club outperforming the market by over 4% annually.
Again, I'm not saying that investing in stock is for everyone. I am saying that if you enjoy stocks and are willing to put in the work, stocks are a good place to put your money.