Thursday, January 19, 2006

Stock Tips

Today, let's discuss an interesting quirk of market economics.

Say you own a stock in company A. If company A posts its largest quarter profit EVER, sell the stock. It's a demonstrated fact that, the more profitable a company is, the more the stock will drop.

Small profits will result in small drops, which are quickly remedied. Large profits, however, take a while longer to recover from, and you may lose significant value.

The real world scenario I'm discussing here is Apple. After their most profitable quarter EVER, their stock dropped almost 10% overnight.

Note: This rule, apparently, doesn't hold for stocks in oil companies.
posted by S.C. @ 8:57 AM |

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