09-30-2013, 09:22 AM
(09-30-2013, 09:07 AM)hendi_alex Wrote: They visit this topic kind of regularly on Bloomberg. Recently one guest was discussing how about 70% of the market action comes from day traders and high frequency traders, and that they almost exclusively make their decisions based upon the headlines of the day or of the week. For 'investors' I think that your observation is correct. Such headline news has no effect on the value of a company and the fair value of its stock.
That's good insight. I guess that is as good an explanation as any as to why an individual investor following a conservative dividend growth strategy with a long time horizon really can beat the "smart money" on Wall Street. The myopic focus on short term results almost forces them to put far too much emphasis on daily and weekly political events, creating periods of over- and under-pricing that smart individuals can use to great advantage, if they have the time and patience to do so.