Stock analysis is the stock market efficient
Some people argue that stock market is efficient and that you should not spend any time trying to beat the market averages. On the other hand, others may argue that the market is not efficient. It is not productive to debate about this on whether the market is efficient or not, the important point is to think about the extent to which it is efficient. Instead of thinking about the market efficiency, I should start to ask, “Can I make money in the stock market“? Making money in this case means generating above average returns. My answer to this important question is “Yes, of course.“ If I thought otherwise, I would not be investing in individual stocks. But it is also important that making money is not effortless. There may be bargain out there, but there is no free lunch.
As a starting point, consider these two simple questions. They should help you start thinking about making money in the stock market and whether or not you should try to invest in individual stocks or you are better off investing your money in an index fund. First question would be do most of the professional managers generate above average returns in stock markets? Secondly is most of the individual investors generate above average returns in the stock market? I believe the answer to both of the questions is no.
First of all, since most of the fund managers do not beat the market average, it should be clear that you should not listen to most of the fund managers. On the other hand, investors will incur the cost of trading in terms of brokerage commissions, but as long as you do not trade often, you will do as well as or better than most fund managers. Overall, the stock market can help you make money if you are willing to put in time and effort to develop the winning mindset to learn and to play the game.