Stocks Intermediate: 20 Stock-Investing Tips

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1.
The future is unpredictable. But you can protect yourself against unpredictability by having a margin of safety built into a stock that you buy.
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True. A margin of safety -- for example, paying less for a stock than its book value -- can dampen the effect of the futures unpredictability.
2.
When owning a stock, you should evaluate its price relative to the price you paid for it.
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False. The price you paid for it isnt very relevant. What is relevant for evaluating a stocks price is the estimated value of future cash flows.
3.
Which of the following should you tune out?
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A prediction on television about where the market will be next year. You should tune out the noise, which includes short-term predictions made by others concerning things that cant be predicted.
4.
A patient stock investor watches her _______ most of all.
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Companies. A patient investor pays attention to the companies that issue the stock. Watching stock prices is less helpful.
5.
A good investor ______.
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Is willing to go against the crowd. The crowd is often -- but not always -- wrong.