What is "stock" any more?

Discussion of the Stock portion of the Permanent Portfolio

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Jeffreyalan
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What is "stock" any more?

Post by Jeffreyalan » Sun Feb 03, 2019 4:34 pm

Since most people on this board invest in the PP or a similar portfolio, I assume that most believe in stocks as an asset class that respond to certain economic scenarios. Is the thought that stock is an individual ownership in a company and you reap the benefits and risks of that company sort of passe now? It seems like I read somewhere that around 70% of a stock's movement is determined by the market movement and not its own individual company prospects.
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Kbg
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Re: What is "stock" any more?

Post by Kbg » Mon Feb 04, 2019 9:29 am

This has pretty much been the case for a very long time (high correlation with the broad market). However, expectations meeting/exceeding/disappointing still make a big difference at the stock/company level...but not on those days (or over longer periods associated with an event), mostly gonna be the market move.
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ochotona
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Re: What is "stock" any more?

Post by ochotona » Mon Feb 04, 2019 11:24 am

If you build a portfolio with stocks which don't have enough "float" to be able to be included in the major market indices, you have the potential of avoiding being dragged around by the passive investing crowd. Having said that, I have never looked for these stocks. Probably would be micro-caps. AAII has lists of this kind of thing.
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Kriegsspiel
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Re: What is "stock" any more?

Post by Kriegsspiel » Mon Feb 04, 2019 1:35 pm

Jeffreyalan wrote:
Sun Feb 03, 2019 4:34 pm
Since most people on this board invest in the PP or a similar portfolio, I assume that most believe in stocks as an asset class that respond to certain economic scenarios. It seems like I read somewhere that around 70% of a stock's movement is determined by the market movement and not its own individual company prospects.
Stocks (companies) as a whole do, and when you own broad indices, that's what you are concerned with.
Is the thought that stock is an individual ownership in a company and you reap the benefits and risks of that company sort of passe now?
Not if you own an individual company's stock.

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