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Is it true that it will take 2 to 4 hrs for researching stock

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  • It depends. How bad would it hurt if you lost the money? Oct 28, 2022 at 13:30
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    Sure, if it takes you that long to read Common Sense On Mutual Funds by John Bogle. Oct 29, 2022 at 3:26

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How much time should you spend researching a house? It depends on what you plan to do with the asset, and what your opportunity costs are.

You should spend no more time on research than the expected value of that time to increase your returns.

If you’re very busy and have a long investment horizon (at least a couple years), do 0 research and buy a broad-market ETF.

If you’re buying risky derivatives, e.g. you’re unemployed and YOLOing your life savings on Robinhood, or are working at your stock-picking job, you need to be extremely certain your bet is going to go in your favor, so it is worth taking more time to truly understand the company underlying the ticker symbol. In fact, there are analytics companies and hedge funds who basically do just research 100% of their time. But they are putting millions-to-billions of dollars on obscure bets.

Are you about to spend well above market on a leveraged buy-out? You should probably spend significantly more than a few hours thinking about it, Mr. Musk.

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Is it true that it will take 2 to 4 hrs for researching stock

Remember whatever you determine is the typical number of hours for YOUR average investment decision, that number may be just the beginning.

You also have to decide if you should add more money, or hold, or sell some, or sell all the your investment. How long it takes to decide will be specific to your situation. You should do this reevaluation periodically to see if the situation has changed.

So those 2 to 4 hours may be just the beginning....

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Is it true that it will take 2 to 4 hrs for researching stock

No.

There is little or no correlation between amount of research and financial success. Consider professional fund managers: They research investments for a living (and get paid an obscene amount for doing so) but the vast majority of funds can't even beat the S&P 500 which is a simple index fund that doesn't require any research at all.

In fact, there is research that the "drunken monkey" method of random investing outperforms top investors: https://www.npr.org/sections/money/2021/08/03/1022840229/why-even-the-most-elite-investors-do-dumb-things-when-investing

I own stock from a former employer so I was tracking forecasts and research for a bit. I've given up on that. For every Analyst that says "buy" there is another Analyst that says "sell" and not a single one came anywhere near to predicting what actually happened.

The notion that researching a stock is useful for an individual investor is flawed. In fact individual investor shouldn't invest in individual share anyway. Broad diversification is your best shot.

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