There are traders and investors. Traders watch the market with software that looks for patterns and trends in stock prices. They buy and sell in short time periods and the companies that the shares are ownership of really do not matter. There are also investors, that research and screen and find stocks underpriced...
Best answer: There are traders and investors. Traders watch the market with software that looks for patterns and trends in stock prices. They buy and sell in short time periods and the companies that the shares are ownership of really do not matter. There are also investors, that research and screen and find stocks underpriced to their potential. These small and mid-cap (versus microcap, penny stock or famous large cap) take more analysis. Investors look for overreaction and wrong reactions of prices to news. The problem is that news is public. Occassionally, a tidbit is found that is missed as to what it means. That could be in a large cap as well. I am an investor with patience. I have found only a few unnoticed news items, In the past, Lions Gate Films high revenue growth by acquisitions even though losing money, bought at $2, sold at $4, $8, and $12 in pieces. HP-Compaq merger announce, but Compaq stock did not go up in price had a news article of mutual funds making heavy purchases of both HP+Compaq. This was a 30% gain gift of a merger I knew would happen even though the market was very skeptical. I own shares of CAI International, that has fallen in price on a good earnings report. The risk is a high debt level leverage, but for those with faith, I expect good rewards over time if the economy remains robust. Do your own research. There are no guarantees in news. Once announced, the market reacts in minutes. There is usually an over-reaction. You can either take a trader's approach or investors approach, but you need to decide whether you will be monitoring minutes of trading or wish to study and screen and just time your buys and sells over a longer period. No news guarantees a direction. A CEO resigns, and a stock can go up or down. I guess when CFO (Chief Financial Officer) resigns, the stock will fall as the company chicanery is uncovered. A company stating a negative outlook will fall, but it happens very quickly overnight and opens lower where it belongs. Maybe you can buy after the panic sellers are finished. Investors only look for misinterpeted news, or opposite market reactions. Traders trade on buying and selling in progress at a time, regardless of the cause or type of news. Do you know that the tax reform will cause some companies to announce a huge 1Q2018 loss as they write down tax advantaged investments? You would expect tax cuts to cause gains. Watch for the billion dollar losses for a market reaction price drop as a possible buy.
2 days ago