Question

You belong to a stock investment club that is evaluating new stock acquisitions. One of the...

You belong to a stock investment club that is evaluating new stock acquisitions. One of the club member arrives at the meeting and suggests that the group should consider investing in a company she read about on an investment blog that she follows on the Internet. She says that the log has example of investment recommended there that have doubled in value in just a few months. What do you think?

Homework Answers

Answer #1

Stock market is something we cannot depend on the trends of the market, the suggestion of the member is not striking as a good one because of the following,

  1. She depends completely on the blog circulating on the internet and the information is not from a trusted source.
  2. Increasing the value in the recent months doesn't mean that it will increase its value in the future.
  3. One should consider the target prices to be secure and blindly should nit follow the trends of the market.

Considering this the evaluation should be made further to decide on the investment.

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