Stock market for beginners
Long-term investors
The good news for long-term investors is that at the end of the day, fundamentals are all that is important. For instance, a stock price may drop because of negative rumors, but, if the fundamentals are sound, the stock price is bound to recover. They look at the quality of the fundamentals of the business and the quality of management in order to assess what can happen in the future. They have a long-term view of their investments and are often prepared to wait patiently for their rewards. Long-term investor, the focus is on future earnings and not on current earnings. The important principle to remember is that when you invest in a stock, you are investing in the future earnings potential of the company The long-term value investor, perhaps more than any other type of investor, is more concerned with the business and its fundamentals than other influences on the stock’s price. Fundamentals, such as earnings growth, dividends, cash flow, and book value are more important than market factors on the stock’s price. If the fundamentals are sound, but the stock’s price is below its obvious value, the Long-term investor knows this is a likely investment The market has incorrectly valued the stock. When the market corrects that mistake, the stock’s price should experience a nice rise.