Why are the stock markets efficient in the long run but inefficient in the short run??
470263
In the short run stocks can move on emotion & incorrect information/assumptions/rummor. In the long run these all balance out with reality. Over time, valuation is ultimatly reflected. That's not an exact point in time. But the value of a stock over (let's say) ten years is more of an indication then the last week.
383290
University professors in financial departments across the country had done enormous number-crunching studies on computers and for the most part say that the stock market is horrendously unpredictable.  The consensus is that it has gone up ~10% a year since 1802 and is therefore likely to go up in the future, but short term predictions are not felt to be possible.
3635
If you're worried about daily/weekly price swings, you are in too risky of a market.  Stocks are more for long term investing.  Short term swings are unpredictable.  Some win, more lose.
754170
Basicly the reason is that free market mechanism optimize short term profits. Examples abound: \n- why investing in pollution control *now*, although cleaning up in 20 years might cost much more?\n- why investing in fundamental research *now*, although it might give us a killer app in 10 years? \n- why not move our production factories to India and China *now*, although our workless population at home may no longer be able to buy our products in five years?
453546
market theory suggests shorting a stock (selling a stock not owned with the expectation it can be purchased in the future at a price lower than for which it was sold) in substantial enough quantities creates a temporary imbalance in the supply/demand equilibrium, requiring a lower price to attract buyers to return the stock to a new, but lower s/d equilibrium price.  This is a short run phenomenon for liquid stocks.  It should be noted that stocks with substantial uncovered open short interest are actually less resistant to price drops.
729205
Its because the market is constantly changing and thats what day traders try to capitalize on. Stocks make money through either capital appreciation (raises in value) or dividends (money paid out from company). Day traders usually do trades that run from a couple of thousand dollars to much more. They make their money by using the large amount of stock purchased with those thousands and then later sell them after capital appreciation. Meaning the value of the stocks went up and they sold them for more and since they bought so much stock those few cents turned into much more than even thousands in some cases. The reason its so risky is because stocks fluctuate meaning they also go down although historically the stock market continually rises. Hope that gave you an idea.
772126
Yes..It depends how active the stock is and if it is widely held.. Some very small stocks have very little volume..less buyers and sellers - therefore more time would be needed vs seconds for a larger stock.
55222
There are strong buys and strong sells,\nalso some banks have underperfom, neuteral and  overperformer. S&P stock analysts use stars, 5 the best, 1 the worst. Don't take the analyst reccomendations seriously though. They are out to try to maniupulate the price of a stock more than giving out good advice. Go to yahoo and pick several random stocks, check analyst opinions and look at the stocks history, you would notice that their reccomendations were either random, or they were dead wrong.
1030867
I'd just like to take this opportunity to point out that technical analysis is a really bad way to pick stocks, especially for people who have very little experience.  Anyone can come up with a technical trading method and hype it up as infalible, and they'll be able to show plenty of examples where you could have doubled your money in a few short weeks.\n\nThe fact that you're coming to an internet answers site for advice on TA trading tells me that you should really consider buying mutual funds instead.
813895
it is surprisingly easy to learn the tricks of the trade market. i had a class in high school where we learned all about it and had a website we signed up for to play with fake money in the real stock market and we all became pretty good at it.
1156062
That is like asking "why are we here" or "how do i measure volatility in options?"  It is a famous question which is examined in every finance class and probably will be till the end of time.\n\nAn excellent question. Some use expected return and combine it with likelihood of occurance, some use CAPM, which gets into diversifiable and nondiversifiable risk. Some use short time periods, others use longer periods. Some assume efficient market theory, some don't. There are many many ways to measure risk...ask 20 people, i am guessing you get 20 answers...each equally correct....
171946
You have riskless securities such as tresury bills. they have a fixed rate of return after a certain time. it is known and fixed.\n\nhowever, if you take stocks for instance, the rate of return will be higher, as there is a risk involved. in the rate of return was not higher, you would never go for a riskier option and stick to the garanteed return.\n\nthe amount of extra return on a risky secutiy is the investors 'premium on risk'. the riskier the investment, the higher the returns
1048664
See WorldCom and Enron....\nTraditional financial analysis overlooked the simple facts of financial analysis techniques...
822945
You're logic is flawed.  Not EVERYONE who invests uses the same identical methods and/or mathematical indexes, AND not all of them have an affect on the market.  \n\nMany, MANY different techniques are utilized... and your's would just be one more of thousands of "get rich" plans.\n\nDon't quit your day job.
57921
Actually, there's no consensus that it does. \n \nTechnical and fundamental analysis are two ways of trying to achieve market beating returns.  The vast majority of professional, highly paid stock pickers are unable to regularly outperform the market (index funds), after subtracting trading costs.\n\nHope that helps.
1178727
There are so much fluctuations in the trading of a stock sometimes it's hard to quantify one specific event.  Besides, bonus shares that are issued often is just a very small % of the total shares outstanding, you may or may not see any stock price impact because of that.
1009186
If you don't know, then no.  Single-stock investment really works best with thorough due diligence and a match of that company to your investment strategy (are you a value investor, playing short-term cycles, etc.)  \n\nEvery person I know that makes money consistently in direct stock investment do so because of thorough understanding of their risks, companies they're working with, etc.