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

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1.
A stock investor should learn to think most like a _______.
Choose wisely. There is only one correct answer.
Business owner. Given that buying and owning stocks is ultimately about owning businesses, it is wisest to think like a business owner, and that means learning how businesses work.
2.
Investors who trade frequently will, on the average, end up with higher tax burdens to pay, as opposed to not trading often.
Choose wisely. There is only one correct answer.
True. Generally, the more you trade, the more gains you make, and the more likely they will be of the short-term variety, which are taxed at higher rates than long-term gains.
3.
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.
4.
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.
5.
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.
DONE