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As I have discussed in section 14, the stock market is informationally efficient. The efficient market hypothesis gained even more strength recently with the technological advances in commission-free trading, fiber-optic internet speed, and greater market participation. Most of the historical information is immediately reflected in the stock prices.

Besides being informationally efficient, the stock market is also a forward-looking indicator. Analysts evaluate stock prices based on companies’ future revenue growth and profitability expectations. Active investors position capital into securities of companies they feel could benefit from future growth. As a result, today’s stock prices reflect not only historical information but also future expectations.  

Conclusion:

The fifteen investing principles create the foundation of investing. Before you go on to build your wealth castle, you need to understand how to build a strong foundation. This is the starting point of your investing journey. The learning process of being a successful investor only starts here and continues through your life.

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