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Q&A: Seeking a Stock

Q:

I'm trying to find the company that manufactures touch screens for Apple, HP and many others. Supposedly there is one company that produces more screens than any other company. Do you know the company? I understand their stock outperforms the norms. Thanks.

A:

I'm pretty sure I know the company you're looking for. However, before I tell you, please consider the following (paying close attention to the italics):

Everybody knows that touch screens have been extremely popular. That's why this firm's stock price has risen from about $15 in 2009 to over $80 today. Last year, it traded at almost $93 per share. So, what will it be worth tomorrow? Do you expect $75 or $95? 

Those who are buying the stock today are probably guessing it will be worth $95 or more. However, you cannot ignore the fact that for every buyer of a stock there is a seller who just a fervently believes the exact opposite of the buyer. The seller is no fool. There aren't selling the stock because, based on their knowledge or hunch, they expect it to go higher. That would be dumb.

So, we face a conundrum. Two reasonably well informed people (or institutions), neither or whom can know the future, have taken to diametrically opposing positions. Each is betting hard-earned money that the other is wrong. Since the majority of stock trades are by mutual funds and other institutional traders, who spent millions of dollars on research, who is more likely to win the bet? More often than not, it won't be you!

That said, I'm pretty sure the stock is Synaptics (SYNA). They have been the largest touch screen supplier for many years, but that can change at any time. These days, they face more competition than ever before, so who knows (literally) what the future might bring.

Please don't play individual stocks with any money you can't afford to completely lose. Serious money can be invested in stocks. Just try to buy them all.

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