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Investors (or fund managers) make a living by managing a selection of shares from various companies and hoping for a profit when share prices move. Generally, they buy shares in companies they think will rise in price over some time period. In other words, they try to predict the future. They may select companies based on information such as: how much profit the companies are making; how the shares performed in the past; or other indirect information like whether a company is a takeover target (means a company has a good prospect). Managing a share portfolio effectively is a complex task; there are many information sources to be monitored, including share price movements, currency exchange rates, industry related news, and company specific news, many of which change in real time.
There are many underlying assumptions and perceptions about how the stock market works, what factors influence the price, and subsequently, how we should invest in the stock market. Some argue that