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Hi Troopers,

In a way we are all gamblers. Some gamble with precision, some gamble with gut feeling and some gamble on luck.

So, what is the difference?

NONE! a gamble is a gamble. So why are some gambles in the market more precise than other gambles when it comes to results?

Is it the integrity of the company, the foresight of research or a global move towards a consistent assurance of results.

Many companies form, then fail over different terms. Some companies will form and never really achieve anything substantial. The gamble here is on the perception of management and their execution. Has the management done everything in its power to conceive results?

If the answer is YES, then the management was duly cooperative in achieving results. In this case we need to look at what caused such a failure to occur, is it cash flow, lack of resources to execute the program or the deficiency in assets and their lack of realised value.

Needless to say, any of the above failures if not corrected should be priced into the share price accordingly as a negative outcome and most importantly, it is the time frame in which this happens.

So, on the other hand, a company does achieve results as stipulated by management’s plan and accordingly are rewarded through appreciation and also most importantly lack of share dilution. This is an ideal scenario for an investor, due to the limited time used to achieve results.

But, in all honesty how many companies can really take a stake in such a tremendous outcome or claim instant success?

I don’t know of any personally other than to say PRU springs to mind as a company of the highest standards in my books, may I add so far.

So it goes back to my initial statement that these investments are all gambles, but some will stand out as being ultimate achievements in resourcefulness.

Now, the difference in attitude is what brings about change. A gamble is a risk, chance or even fortune telling. Laying out hard earned money into something you do not understand is at best a risk of un-calculated proportions. How could one risk so much for an unknown quantity of return.

On the other hand, something you do understand and can comprehend to the point of saying “I know about this” differs immensely. Then when you gamble on understanding, you are able to quantify results to the point where you could also say “I know this is a very likely outcome” hence your gamble portion greatly diminishes.

The essence of this post is to re-iterate the importance of due diligence when researching stocks. It is absolutely crucial to know what you are looking for when doing so and not rely on recent share price movement or someone’s so called expertise on the subject.

The whole reason for doing research is to understand, quantify and execute accordingly.

An old saying that I have lived by all my life is:


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