The only surefire way to beat the stock market is to buy for investment incomes.
Trying to beat the stock market in the sense of paying less for a stock than it's really worth, based on the risk you're taking, is complicated and probably impossible for ordinary people.
Even the Highest Paid Fund Managers Cannot Beat the Markets Consistently, Long Term
The price is constantly going up and down, based on a bargaining process you have no control over. It's also based on income you may have access to, but which will change while you're studying the annual report and analyzing the latest financial projections.
And the market price will change later on, based on new information you cannot predict, because it's in the future.
In fact, the market price of the stock will go up and down a lot in the future. If you hold it for the long term, you will see it go up and down -- often.
And the stock market itself will swing from bear to bull to bear market, over and over again, taking the market price of your stock with it.
How can you determine what is a fair price to pay for a stock when it's constantly bouncing up and down while the New York Stock Exchange is open?
Without knowing the future, you can't.
Stop Wasting Time Worrying About Stock Prices
Therefore, your only logical argument is to buy stocks you want to own at the market price and stop thinking too much about it.
But of course, then the question is how to decide which stocks you want to buy. If you're not buying them because you believe you can sell them for a higher price, then why buy?
Buy Stocks for Dividend Income
For income of course.
Many stocks pay dividends to their owners. Receiving an income from your investments used to be the main reason people bought stocks.
I do agree with value investors in the sense that it's better to buy a stream of dividends for a low price rather than a high price.
However, this is usually determined by the overall state of the market. Right now, we're in a bear market. Therefore, streams of income are relatively cheap.
But since we're investing for income, not capital gains (an increase in stock market price), we don't have to worry about whether we're paying a higher price than everyone else.
Cheap is Better Than Expensive, but You Won't Be Certain Until the Future is Past
You can find companies with high dividend yields in relation to their market price, and those with low dividend yields in relation to their market price.
On the surface, the first group seems to be a better bargain. But in the future the second company may increase its dividends faster than the first and catch up with it. You can't know the future.
Therefore, your main goal should simply be to set up as many investment incomes as possible, to support you after you retire.
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