In his classic investment book Security Analysis, Benjamin Graham said in the short term, the stock market behaves like a voting machine, but in the long term it acts like a weighing machine (its true value will in the long run be reflected in its stock price). Of course the same applies to individual stocks also.
Graham distinguished between the passive and the active investor. The passive investor, often referred to as a defensive investor, invests cautiously, looks for value stocks, and buys for the long term. The active investor, on the other hand, is one who has more time, interest, and possibly more specialized knowledge to seek out exceptional buys in the market.
Follow me on twitter