Topic: How To Invest

What is Pat’s commentary for the week of October 20, 2020

Article Excerpt

Many investors go through a time in their lives when they’re interested in market lore—observations of stock-market trading patterns that suggest easy, dependable tools for profit. In pre-computer days, the search for these patterns took a lot of work, at least for amateurs. They had to visit a library and dig through stacks of old newspapers and other paper records to do the research. University professors had an easier way: they could assign graduate students to do the digging. The search for profit-making guides to trading really took off after reasonably priced computers came along. Academic researchers began churning out a long string of scholarly studies on the subject. Three particular research areas attracted a lot of interest. The oldest of the three was value investing. It centres around the idea that the key to profit is to buy stocks that seem cheap in relation to standard measures of value such as earnings, dividends and book value. Momentum trading was the next most…