(07-16-2021, 03:46 PM)jagibelieve Wrote:

(07-16-2021, 01:24 PM)The Real Marty Wrote: I would like to ask all you guys, who are dabbling in the market and posting here, a few simple questions.  

1)  What causes a stock to go up or down in the short term ( a day or a week, for example) ?  

2) What causes a stock to go up or down over the long term ( a few years) ?  

3) If a stock goes down, does that increase the odds that it will go up ?  

I have a strong impression that the ones of you who post the most in this thread don't know the answers to these questions.

1)  Short term is usually because of news.

2)  Fundamentals.

3)  Not really.

I seldom buy/hold securities in the short term.  I define "short term" as a year or less.  For that matter I seldom buy individual stocks.  I prefer ETF's and/or RIETS.  I did a short term deal with Boeing when the bottom fell out last year and rode it for a while.  I made a quick profit and got out fairly early.  However, I still hold an ETF that is weighted heavily by Boeing that I have had since 2016.  I have not only made gains from my buy/sell points on the price of the ETF, but it also has paid a decent dividend (nothing to write home about).

I still stand by my philosophy that "day trading" or "investing" short term is a fool's game and nothing more than gambling using the stock market as a casino.

You are correct.  From the responses, I would say a lot of the people who post most often in this thread don't know the answers to these incredibly basic questions.  But I knew you would have the correct answers.  Here is how I would put it: 

1)  What causes a stock to go up or down in the short term ( a day or a week, for example) ?  Unexpected events.  I saw a post where someone said they were going to buy Pfizer because their vaccine was about to get approved and they thought that would cause the stock to move up.  But everyone knew the vaccine was going to get approved.  So the stock did not move.  Things that are known and expected are already priced into the stock.   A successful launch for Blue Origin was expected.  So a successful launch is not going to move the stock.   The most common cause for short term movements is events, but the events must be unexpected.  

2) What causes a stock to go up or down over the long term ( a few years) ?  The business fundamentals.  Company results and future expectations.  "In the short run, the stock market is a voting machine.  In the long run, it's a weighing machine."  Warren Buffett.  Fundamentals always win out in the long run.  

3) If a stock goes down, does that increase the odds that it will go up ?  No.  Someone says, "this stock is at 13.  If it goes to 10, I'm buying more."  What they ignore is, what caused the stock to drop like that?  Answer: New facts that affect the value of the company.  Should we ignore those facts and just buy more?  That makes no sense.  Just because a stock goes down, that does not mean it's more likely to go up.  It usually means something unexpected happened that made the stock less attractive for a good reason.

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