"In an ever changing market one constant will persist: Human Nature!"

From Fear to Greed: The stock market is never static. It's similar to a giant pendulum swinging from undervalued to overvalued time and again. When the public hears bad news, fear stimulates rash selling and drives the market toward undervaluation. Then when the public begins buying the now-cheap stocks, greed within the masses stimulates the momentum that swings the pendulum past the real value of companies (intrinsic value) toward overvaluation as everyone wants to own the newly popular stocks. And the cycle begins again.

Human Emotion: Understanding the impact of human emotion on the market is essential in being a successful investor. Most investors make decisions based on one common theme: Confirmation. If a stock is popular and everyone is buying it, if all the well-known analysts and brokerage houses are touting it, if the media says it's looking good, it must be the stock to buy! If things are uncertain, if bad news appears or an analyst downgrades a stock, it's automatically time to sell! The prudent investor ignores the emotional reaction and “crowd” sentiment, and bases his decisions on his own careful analysis and methodical, business approach to investing. And in doing so, he often finds his decisions opposite that of the crowd: buying in periods of fear and selling in times of market greed!

Opportunity Knocks: For the experienced investor, the recurring emotional swings of the market pendulum offer the opportunities for buying and selling that will achieve capital gains. Identifying a good company, the prudent investor waits patiently to buy until sentiment-driven swings in the market carry its stock value below a fair value. Then the investor can purchase shares of the company's stock at a bargain, providing a better chance to earn a profit.

Business Valuation: How can an investor know when a company's stock is priced at a bargain? The key is to derive an approximation of the fair or business value of the entire company at a specific point in time. Only then can an investor determine if the company is currently undervalued by the market. Arriving at an approximation of the business valuation of a company requires extensive analysis of the prospective company's operating fundamentals and future potential.

Speculating vs. Investing: Deciding to purchase a particular stock based upon the swings in its price alone is more speculating than investing. A significant drop in a stock's price does not mean it is now selling at a bargain. Knowing the company you are buying and deriving an approximation of intrinsic value is essential in changing an investment decision from pure speculation to investing.

Fundamental Analysis: At KING we invest in companies, not stocks. Through comprehensive analysis of the fundamental elements that drive a company and make it successful, we develop a thorough understanding of a target company's current and potential intrinsic value. This knowledge forms the basis for making wise investment decisions. We are patient investors, waiting for the emotional swings in the market to provide opportunities for prudent buying and selling.