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Stocks 104: Stocks: What Matters and What Doesn't

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1.
Investors have loads of tools at their disposal for analyzing the markets. Therefore, it is correct to say that _______.
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We still cannot consistently and accurately predict market movements. No one has yet predicted the market consistently and accurately; there are too many unknowns. Still, we continue to try.
2.
Which of the following is the most important driver of a company's future profits?
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Its competitive positioning. Competitive positioning will ultimately drive future profits, which in turn will drive the company's stock price.
3.
The stock market tends to _______.
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Be temperamental, over-reacting to near-term news. "Mr. Market" tends to be temperamental, over-reacting to near-term news. If the market were perfectly efficient and correctly valued future cash flows at all times, stock prices would not be so volatile.
4.
As a stock investor, what should you pay the most attention to?
Choose wisely. There is only one correct answer.
A company's competitive positioning. You should pay the most attention to a company's competitive positioning, which in turn will determine future profits.
5.
To be a successful stock investor, you need _______.
Choose wisely. There is only one correct answer.
Patience and the ability to think about future trends. Remember that successful stock investing is like chess, where thought, patience, and the ability to peer into the future are rewarded. Stock investing is not about trading.