There are many methods and theories about how to value a company and its share price.
But the debate boils down to two broad methods of stock picking:
Investors pick shares based on a company's prospects. In other words the most important thing is to assess if a company has the chance to make good and strong profits over the long term.
This revolves around observing patterns of share price behaviour to determine a trend and predict the direction of future movements.
In the following chapters we will look at these two schools of thought in more detail.
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