[nightski]

This is just one person's opinion, but even with PE ratios, profitability, or any financial statement you can read determining the value of a company's stock (not the same as the company itself) is almost as hard as bitcoin.

If you can reliably price a stock based on any measure of company value then you could be very rich very fast.

There is a reason they say don't stock pick just buy an index fund and hold.

[mbesto]

> If you can reliably price a stock based on any measure of company value then you could be very rich very fast.

What you're saying is already true and already is happening. The global financial services industry is a $20T industry.

> There is a reason they say don't stock pick just buy an index fund and hold.

Yes for the common retail person sure, but someone has to purchase stocks to put them into an index. Those are professionals who evaluate PE ratios, profitability, and financial statements.

[lowdest]

>Yes for the common retail person sure, but someone has to purchase stocks to put them into an index. Those are professionals who evaluate PE ratios, profitability, and financial statements.

This is not what an index is. You are describing a fund, but an index fund explicitly does not evaluate PE ratios, profitability, and financial statements, they buy everything in the index according to the market cap. Some proprietary indices are privately curated in the way you describe, but in common use the "index" means all of the companies, rather than a curated subset.

[mbesto]

> they buy everything in the index according to the market cap

You're splitting hairs. I guess I should have clarified. What I meant was that at some level the companies are being valued based on PE ratios, etc. So while the index funds may not be analyzing the underlying securities themselves (other than determining their weighted value), someone is, such that their market cap drives them being in the index (SP500 for example). Point still stands from the parent comment.

[willturman]

A share of stock is a fraction of the cash flow of a company. A share represents a tangible thing which can valued according to any number of mechanisms.

Cryptocurrencies represent nothing but transactions and the ledger of those transactions (which they are exceedingly wasteful and clumsy at achieving).

[nightski]

You would be correct if the only thing that drove the price of a stock was current cash flows.

What you are leaving out is growth. Stock prices include expected growth of future profits which by no means is a science.

Not to mention all kinds of other things can affect a stock price such as global macroeconomic conditions, interest rates, etc...