The relative value of stock analysis

You will never catch me saying that stock analysis is useless in the investment process. It is an important part of every decision and should always be done. However, is it possible that analyzing certain stocks adds more value to your decisions? I believe so and I will explain why.

Researching potential (and current) investments boils down to extracting information. If you wish to make great amounts of money, I suggest extracting usefull information and, most importantly, information unknown by most investors. In general, information is traveling very fast and is reflected rapidly in stock prices. One of your missions as a greedy and intelligent investor is to uncover situations where information travels slowly and prices do not reflect all the available information. Doing that is the definition of value-adding analysis because you're reading and crunching numbers about stuff that most of the market hasn't had the time or the desire to look at. You're not analyzing information that has been known for a week by the people of Wall Street, their brothers, their sisters, their friends, and their gardeners.

Value-adding analysis is performed on the "forgotten" stocks - i.e. the stocks that aren't followed by the big firms' research analysts and those followed by only a few small firms' analysts. The less coverage a company receives, the bigger comparative advantage you can gain by doing a complete analysis. Indeed, the stock prices of companies with low coverage have a greater chance of not representing all the information. Information travels slowly so such mispricings will eventually end. It is your role to profit from these mispricings while they last. You just have to be ready to read anything (and I really mean anything) you can find about your low-coverage companies of choice and hope to find that precious piece of information that hasn't been digested by the market yet.

While analysis of some stocks has "higher" value, analysis of any stock is valuable and Stock Market Investment Partner recommands serious analysis in all investing decisions.