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Which of the following statements is true? a) The only way to identify a potentially profitable stock is through basic stock analysis. b) The best investment strategies and the best investments are made based on luck. c) Sometimes the best investment strategies and the best investments are made by combining basic analysis with intuition. d) The best investment strategies and the best investments are made with intuition.

User HOERNSCHEN
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2 Answers

6 votes

Final answer:

The correct statement is that combining basic analysis with intuition can sometimes lead to the best investment strategies and investments because stock prices follow a 'random walk with a trend', and predicting stock winners is highly unpredictable.

Step-by-step explanation:

The statement that is true is: c) Sometimes the best investment strategies and the best investments are made by combining basic analysis with intuition. This is because stock prices tend to follow what mathematicians call a "random walk with a trend", meaning they are just as likely to rise as to fall on any given day, although they do tend to gradually climb over time. Moreover, the majority of financial investors do not consistently outguess the market, and trying to pick stocks that will gain significantly is a risky approach and not a reliable way to wealth. Instead, individuals are advised to gain further education and start saving early in life for long-term wealth accumulation.

Financial professionals and analysts engage in extensive research and utilize various strategies to make investment decisions, but it is an extremely challenging task to predict future stock winners due to the unpredictable nature of news that alters profit expectations. While basic stock analysis is critical, it doesn't guarantee profitability, and luck is not a reliable foundation for investment strategies.

User Voodooattack
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Answer: The statement which is true is:

a) The only way to identify a potentially profitable stock is through basic stock analysis.

Explanation: Basic stock analysis is the process of learning, understanding and developing the basic stock ideas in a stock market. The knowledge of this basic stock analysis would help the trader identify potentially profitable stocks.

User Sandeep J Patel
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