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

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1.
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.
2.
Investors have loads of tools at their disposal for analyzing the markets. Therefore, it is correct to say that _______.
Choose wisely. There is only one correct answer.
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.
3.
In general, the more frequently you trade, _______.
Choose wisely. There is only one correct answer.
The higher your tax bill. The more frequently you trade, the higher your tax bill. This is because capital gains will be realized more often. Trading activity is actually inversely correlated to returns. The more you trade, the more commissions you will incur.
4.
Which of the following is the most important driver of a company's future profits?
Choose wisely. There is only one correct answer.
Its competitive positioning. Competitive positioning will ultimately drive future profits, which in turn will drive the company's stock price.
5.
The stock market tends to _______.
Choose wisely. There is only one correct answer.
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.
DONE