Join your fellow student investors at The Motley Fool’s annual Fools of the Roundtable on March 4th.

You’ll be learning about how the Foolish business works, and meet many of our advisors, including Tom and David Gardner. Tell us, what would you like to learn about when you’re here?

I am very much looking forward to picking the brains of the stock advisors and learning as much as I can during the Student Investor Day at the Motley Fool. Some of the things that I would like to learn about are whether the analysts at the Fool use fundamental or technical analysis when looking at different stocks. In their professional opinion what are the advantages and disadvantages of each method. I would also like to hear some opinions on high dividend stocks vs. high growth stocks. Lastly I would like to know what the stock advisors at the Fool think about the efficient market hypothesis. Do the advisors believe that the stock market follows a random walk, or can the movements be predicted with statistical tools like regression analysis?


Again, I am looking forward to the learning a lot during the Student Investor Day at the Fool.

Jacob Witteveen
Purdue University

With the steady rise of automated trading, at least for retail traders, do you think the markets will behave differently in the next few years compared to the past? Will human psychology play less of a factor than it has in the past?

Also, how is trading for a company such as Motley Fool different from trading for a hedge fund? The goal of both is to pick winning stocks, but do you go about it with a different mindset than trading funds? Do you also have access to privileged market data that retail traders don't?

Thanks,
Achintya Rana
George Mason University

I would like to learn how Tom and David got their careers started. Where did they work before the fool and how did they get that job? When did they figure that they wanted to be investment advisors?

~Mayo

Hello Fools,

I am interested in knowing what separates The Motley Fool from other investing websites, such as "The Street." I have read content from both sites (as well as some others), and I am excited to hear your take on what differentiates your content from others, as well as what distinguishes The Motley Fool as a place of employment.

In addition, I would like to learn more about the design and organization of the internship program. While speaking on the phone with Ms. Fike, I sought to obtain some of this information but was left confused. It seemed as though decisions as to the direction of the program had not been determined yet. If there is more to be known, I would like to hear about it.

Finally, I would enjoy speaking with some current analysts, particularly ones that may have gone through the internship and are now full-time employees. I have not derived specific questions for them yet, but I plan on doing that prior to trekking out to headquarters.

Thanks,
Brian

Welcome Foolish students,

Keep your questions coming! We'll be putting together our panels and taking all of your input into account.

Brian, sorry there is confusion about the internship. To clarify, a group of Fools will be reviewing all of the potential interns to match the right people up with the right projects. We'll be working on this throughout the month of March and anticipate finalizing all decisions by April.


Kara Chambers
Foolish Talent Scout

Hey Fools!

Look forward to meeting you all next week. I'll be the guy you can bug to complain about what you don't like about Fool.com :)

Danny Hsia
Dir of Web Ops, Fool.com

Hi Jacob,

I look forward to chatting with you and the other attendees at the Student Investor Day. I'll provide some quick answers and we can talk more in depth at the event.

You asked:

Some of the things that I would like to learn about are whether the analysts at the Fool use fundamental or technical analysis when looking at different stocks.

We are a Motley group here. In other words, we don't really have a one-size-fits-all Foolish way of going about investing. That said, we're mostly a fundamental, bottoms-up type of organization. We spend most of our time looking for great business, with excellent leadership, trading at reasonable prices. There's not too much time spent on technical analysis or chart reading.


In their professional opinion what are the advantages and disadvantages of each method.

I'm any real technical analysis success stories but perhaps I'm not looking for them either. I think there are many examples of successful investors using fundamental analysis.

I would also like to hear some opinions on high dividend stocks vs. high growth stocks. <.i>

We like dividends and have a service for those who seek out stocks with yields North of 3%. It's called Income Investor. We also love Growth stocks and many of our services try to find those companies. Motley Fool Rule Breakers exclusively seeks out extraordinary growth companies. So the short answer is that we like both. I believe both stocks should have a home in your portfolio. BTW- dividend paying stocks are particularly attractive now especially vs. the low bond yields. You can find some excellent business whose stock yields more than their bonds.

For more information on the Real Role of Dividends see this recent piece from Michael Mauboussin http://tinyurl.com/6fkybgv


Lastly I would like to know what the stock advisors at the Fool think about the efficient market hypothesis.

Ummm. Is this a set-up? We don't think much of it. Do they really still teach that stuff? In reality the market is mostly efficient most of the time. It's clearly NOT perfectly efficient.

Do the advisors believe that the stock market follows a random walk, or can the movements be predicted with statistical tools like regression analysis?

A good way to think of the market is a complex adaptive system. You can't predict earth quakes. You also can't predict the movement of the stock market. We spend almost no time trying to make those predictions.

C'ya on the 4th!

Buck

TMF Buck

Foolish Director of Analyst Learning

Hi Achintya,


With the steady rise of automated trading, at least for retail traders, do you think the markets will behave differently in the next few years compared to the past?

No. I expect it will still be volatile.

Will human psychology play less of a factor than it has in the past?
Absolutely not. One of the most important things you need to understand, in order to be successful is the psychological tendencies of investors. Automated trading won't fundamentally change human behavior.

Also, how is trading for a company such as Motley Fool different from trading for a hedge fund?

Perhaps is semantics but we aren't "traders." We consider ourselves investors. We're different in a lot of ways from traders. We don't use leverage. We will hold investments a lot longer. We focus on the quality of the business, leadership team, not on the movement of the stock prices.


The goal of both is to pick winning stocks, but do you go about it with a different mindset than trading funds?

Listen in on the fourth and be the judge for yourself. I think there are many differences between how we operate.

Do you also have access to privileged market data that retail traders don't?

No we don't. I can't think of any market data that would be a competitive advantage (unless it's insider information, which is illegal).

Buck

TMF Buck

Foolish Director of Analyst Learning

as well as what distinguishes The Motley Fool as a place of employment....

Brian,

While I doubt you'll find ALL the answers to that good question when you visit us, I hope you do find some.

And I hope you and others will take the time to click through this slideshow -- start at #15... and keep clicking.... ;)

http://www.businessinsider.com/best-media-companies-to-work-...

Foolishly,

David

[i]Lastly I would like to know what the stock advisors at the Fool think about the efficient market hypothesis. Do the advisors believe that the stock market follows a random walk,[/i]

;) Don't think they do, otherwise they wouldn't bother with analysis!
I've got a lot of questions, but among the ones I'm most interested in are:
1) After you've done your analysis and picked your securities (be they equities or bonds), what do you do? How do you allocate the portfolio and how do you time your buying/selling?
2) How do you know when you've made a mistake? What do you do then?
3) Everything else =)

~David Lokshin
P.S Excited to meet all of you on Friday!

Hi David,

You asked:

1) After you've done your analysis and picked your securities (be they equities or bonds), what do you do?

Well you follow them (the business, not the stock price). Hopefully you're a net saver so once you've accumulated a nice portfolio (say 15 to 20 psoitions) then you can start allocating more money to your favorite ideas each month. The longer you hold the stocks the more you'll learn about them and you'll know when it's a good time to add.

How do you allocate the portfolio and how do you time your buying/selling?
I wouldn't worry much about either. Investing really isn't about timing. If you accept that you'll never buy at the bottom of sell at the top you'll be a lot better off. Averaging into great businesses is a wonderful way to do it. Obviously this requires you to be net saver. Setting money aside each month to your favorite idea or two is a great way to go.


2) How do you know when you've made a mistake? What do you do then?
The best way to recognize mistakes is to keep a journal, a written record each time you buy and sell or even research a particular company.

Making mistakes is the priviledge of being an active person. Even the best investors in the world are wrong 40% of the time. Investing isn't a science so that shouldn't bother you. In my opinion you'll eliminate a lot of standard error by averaging into great businesses over many years. You'll also do better by holding those businesses and avoiding the temptation to jump into and out of stocks frequently. Here's an excellent speech, if you're into learning more about eliminating standard error http://www.leggmason.com/billmiller/conference/illustrations....


3) Everything else =)

Well that will have to wait. ;-) Did you read the most recent Berkshire report? Here's a link.
http://www.berkshirehathaway.com/2010ar/2010ar.pdf

Buffett mentions the importance of culture. This is something that most Foolish investors hold dear as well. Read the report and then look for other companies that are as shareholder friendly.

Fool on!

Buck

TMF Buck

Foolish Director of Analyst Learning

Hi All,

I've gotten a few questions about the schedule, typically we start around 2pm, have a few panel discussions and a Q&A, and end with a very casual meet and greet around 4pm, where we serve pizza. Things usually wrap up around 5pm.

Also, a reminder on what to wear: no viking helmets with evening gowns are allowed, and no more than two colors not found in nature. That's the extent of our dress code. Please, come as you are!

Fool on!

Kara

Hi David.

With respect to your question about the efficient market hypothesis:

As a professional stock picker I've come to believe that the markets are not at all fully efficient. It's easiest to see this when you look at previous bubbles that have formed - Internet, real estate, etc.

Markets in general, and the prices of individual securities in particular, are often not priced correctly. I believe that's the case mostly because we're all human and we allow our emotions - mostly greed and fear - to influence our actions. Investors often buy and sell stocks at exactly the wrong times. How could any market be efficient when the beahvior of investors is so often irrational?

I believe that it's possible through careful, thourough, and unemotional analysis to find stocks that are mispriced. I also believe it's possible to "beat the market". It isn't easy though. Using index funds and/or purchasing market-leading, blue chip companies at reasonable prices to build your portfolio and your wealth are fines ways to go too.

Lucky for me that the markets aren't fully efficient - if they were, I'd be out of a job.

I hope this answers your question. I look forward to meeting you.

Best,
Ron Gross
Lead Advisor, Million Dollar Portfolio

Hi, I just applied to the summer investing internship, I'm worried that my resume might not be processed in time for the event, is there anything I can do to participate?

(I'm willing to sit in the corner, you won't even know I'm there)

That aside, how important is risk management? specifically, do you employ risk-to-reward ratios, and break-even analysis when selecting which stocks to invest in? What are the risk factors you consider when choosing stocks? And does the risk assessment differ between commodities and public companies?

thank you!

Xi Lin
George Mason University

Hi, Xi! You ask a very good question about risk management. I'll talk a little now, and am happy to talk more at the event.

Academics can't even define risk, despite 40 years of trying. Nobody can measure risk, either. Risk is a future concept, by definition, and "risk" defined by a young investor with 40+ years before needing his or her investment money will be different from "risk" to someone in her late 60s who's barely getting by on Social Security.

They'd each want to think about risk differently.

Most "measures" of risk (risk cannot be measured; it can only be approximated by things like volatility over a certain period of time) are dicey even on a portfolio level, and are especially hard to apply to a single investment. Investments don't obey any laws of nature, like in physics; economics and finance (a subset of economics dealing with valuation) are social sciences.

So my view in a nutshell is that risk management is extremely important, both for an investment and for a portfolio. For a company (public or private) or a commodity, the very best thing you can do is to understand the factors that will move the investment up and down, and take your best guess, so to speak, either in discount rate you use to value the company, or in your overall assessment. It sounds fuzzy, but overquantification of risk easily becomes pseudo-science, and wrong, as we found out in 2008-2009.

Hope this helps, and hope to see you soon.

-James

Hi Xi Lin,

Not to worry about your internship application being too late, the deadline is not until March 15.

The Foolish recruiting team will be reviewing the applications throughout the last two weeks of March and will get back to everybody by April 1.

Thanks, and looking forward to meeting you in person on Friday!

Kara

"Hi David.

With respect to your question about the efficient market hypothesis:

As a professional stock picker I've come to believe that the markets are not at all fully efficient. It's easiest to see this when you look at previous bubbles that have formed - Internet, real estate, etc.

Markets in general, and the prices of individual securities in particular, are often not priced correctly. I believe that's the case mostly because we're all human and we allow our emotions - mostly greed and fear - to influence our actions. Investors often buy and sell stocks at exactly the wrong times. How could any market be efficient when the beahvior of investors is so often irrational?

I believe that it's possible through careful, thourough, and unemotional analysis to find stocks that are mispriced. I also believe it's possible to "beat the market". It isn't easy though. Using index funds and/or purchasing market-leading, blue chip companies at reasonable prices to build your portfolio and your wealth are fines ways to go too.

Lucky for me that the markets aren't fully efficient - if they were, I'd be out of a job.

I hope this answers your question. I look forward to meeting you.

Best,
Ron Gross
Lead Advisor, Million Dollar Portfolio
"

Thanks Ron, but I just want to point out that wasn't my question - I was quoting someone and pointed out the very same thing you said - namely, that if you believed in the EMH you wouldn't be doing analysis ;)

A few topics that I would enjoy discussing and learning about at the conference include:

•Agricultural stocks and index funds-- Is now a good time to buy into this industry due to growing global population and the imminent onset of climate change? A few stocks that interest me are Monsanto, Mosaic, and the two agriculture index funds: JJG and DBA.

•Inflation and Gold-- With inflation rising, most investors look to gold as a hedge against the ailing dollar and a weak economy. Now that the market seems to be back on track (kind of), does it make sense to hold onto, or even increase positions on investments in gold? Could a gold bubble occur within the next 20 years? A few tickers related to this topic include GLD and DXDDX.

•Apple Inc.-- Apple has bested Wall Street's estimates several times during the course of its existence. Some investors believe that it has reached its peak and that its share price is too expensive. However, the company has shown growing profits year after year because of extremely innovative products such as the iPhone and iPad. Its market share ownership in the smartphone business is about 25%, and it owns more than 70% of the tablet market. Given the fact that the iPad has no true competitors (yet), and that its line of Mac PCs will likely gain much of the PC market share in the coming years, shouldn't Apple's stock be a strong "buy"?

I'm looking forward to meeting all of you on the 4th!

Thanks,
Ronald Everett
Georgetown Day School

Hey Ronald (nice to meet another fellow High Schooler!) -
Just a thought about Apple stock - isn't the fact that it has no true competitors a bad thing? Because it isn't a natural monopoly - there is nothing stopping others from entering the market, which means in the long run, they will... so if we're considering the investment in a long-run perspective, their market share isn't really that much of an asset.

Somebody disagree with me.

~David Lokshin

Dear fellow Fools,

Kara Chambers sent out an email suggesting we all provide a little tidbit of information about ourselves prior to attending the roundtable meet and greet. My name is Renee LoSapio and I am currently a Senior undergraduate student at Virginia Tech studying Economics. I am really looking forward to meeting with student investors from other universities as well as learning more about the Motley Fool's company culture. Feel free to approach me on Friday and strike up a conversation. Jokes about economics are always welcomed!

Best,

RML

To be fair, if Apple started expanding the way that say, TATA products has (especially in India-- electronics, cars, plastics-- you name it), they would be victorious in becoming the US equivalent. I can't speak for the company, but its likely that Apple, Inc has the financial capital to begin expanding in such a manner. However, because of their branding I think that they've limited themselves to a particular market and in saying so, have limited their growth.

Its difficult for there to be any natural monopoly though because a perfect free market doesn't really exist.

Apple has had so much success in the market thanks to its strategic marketing strategies. But what do you mean by "true" competitors? HP, Sony, and even Virgin seem to be well suited to fit this title.

Hello Everyone,

Unfortunately it turns out that I will not be able to make the trip out east to the Motley Fool's Student Investor Day. I am very disappointed that I will not be able to meet all of you, but I was pleased to hear that I will be able to watch the video of the conference and listen to the discussions.

In my fist post I asked a question about the efficient market hypothesis. This question has generated a couple of responses, but I think the meaning of the question was misunderstood (probably do to poor wording on my part). Obviously the market is not perfectly efficient. People have made very good livings spotting over or under valued stocks for many years. I was hoping to get some discussion on whether or not it is possible to predict future movements in the stock market. There have been financial econometric experts working on this for a long time, and all the data points to the fact that the stock market follows a random walk. I like statistics and econometrics and think that it makes fun conversation to talk about whether or not there is this mysterious equation out there that can be used to make causal statements about highly persistent data sets (I'm kind of a nerd like that).

I hope that everyone has fun at the Student Investor Day!

Jacob W.

Hi Jacob,
I just wanted to make a comment about your questions about the EMH since you are looking at the problem from a statistical point of view. First of all, we need a reasonable definition of what we mean by efficient markets. The usual definition (depending on what form of the efficient market hypothesis we are considering) is that asset prices incorporate “all available information.” But the question then becomes what should asset prices be once all the available information is incorporated. Suppose we use the CAPM, for example, as the asset pricing model and find that prices are not what is predicted by the CAPM. Then we have to decide whether the test failed because the market is not efficient or because we simply picked a poor model. From that sense, the EMH comes to the party with a Kevlar vest. It’s nigh on impossibly to shoot a hole in it.
From a purely statistical point of view though there are some sources we can turn to. Roll (1984) finds that asset prices display negative serial correlation- so the random walk hypothesis does not hold. Glosten and Milgrom (1985) have shown that the trading process has an effect on the price of the asset. Lo and MacKinley (1988) have shown that not just stock but portfolios too show positive serial correlation at weekly and monthly frequencies. This literature is quite old. But there is a really interesting recent paper by Prof. Heston and some friends at UMD that has shown that if you split a trading day into 30 minute blocks, stocks display a persistent pattern of return continuation. All this evidence is fairly inconsistent with one specification of the efficient market hypothesis- that asset prices (if markets are efficient) follow martingales.
On the topic of whether it is possible to find any kind of persistence in asset prices, the answer is usually no. There is no evidence to support that prices or returns are especially persistent in the short run. This can be seen in the bid-ask bounce literature, the momentum reversals literature and the fact that it’s not that easy to jump on a momentum stock and make money. But there is some evidence to support that volatility displays persistence. People have used this observation to use ARCH and GARCH models and more recently Bayesian techniques to predict asset price movements but whether these methods are viable in the long run is a debatable issue.
Sorry that this response turned out to be longer than I had anticipated. I just wanted to throw my 2 cents in there.
Wachi Bandara.

Wachi,

Very interesting. I will have to check that paper by Prof. Heston. Thanks for your response.

Jacob

Hello Fools I cannot tell you how valuable the seminar and discussion time was, especially the time each of you took out of your day for us, and I wanted to Thank You All! I am excited to be able to place a face to a name when I read your posts and recommendations. Hopefully, we will cross paths again soon as I told my new friend Rice, the owner of Rice & Co unisex barber shop on Queen St, that I would be back from another haircut soon.

Fool |/O!
Richard Casey
TMF: Casey89
Twitter: @richcaseyiii