If you have been in the stock market for any length of time, then you have probably encountered what is commonly referred to as falling and could surprise in price. You may be wondering what falling is all about. Falling is the opposite of rising, which can cause a stock to increase significantly in price. Usually a stock will fall in price before it continues on with its rising trend, but sometimes a falling and could surprise in price occurs sooner than expected. This is typically when a person can profit from their investment because the stock is falling and could possibly continue on with its upward trend.
There are many different instances that could explain falling and could surprise in price. One of these instances is when a company releases earnings which analysts are optimistic about, but they are lower than expected. Another instance is when a big announcement is made regarding an important new product by a company or a government. Sometimes the news can be so negative that a stock will fall in price.
What can you do if a stock you invested in is falling? If you are holding a long position on the stock, then there are several things that you can do. First of all, do not panic. If you are in a long position then you are expecting the stock to move up, so if it moves downward instead, you need to sell, clean out your open positions, and wait for it to reverse itself. Analyze why the stock moved downward, analyze the fundamentals, and make your move accordingly.
What about falling and could surprise in price if you’re a short seller? The short seller does not actually buy the stock. They borrow a specific amount of shares from a stock broker and they use this as leverage against the stock. This gives them more buying power than the actual stock. They then hope that the company will be able to reverse its downward trend and start to rise again. If they get in before the stock reverses, they get to buy the whole lot for next to nothing.
So what can you do if you’re afraid of falling and could surprise in price? First of all, find yourself a good long position. Try and find something that is usually held by a long position and play it. Make sure that it is steadily rising, and if it is, you should be in safe water.
Where should you be looking if you’re afraid of falling and could surprise in price? Well, first of all, look for a stock that is not widely traded. That way, you know that there aren’t many people panicking and selling. Look for a company that seems to have potential. Also, look for a company with a solid management team that has a plan in place if the economy does turn south.
Here’s an example – Wal-Mart is a great company to have long positions on. Now if the economy takes a nose dive, and the stock takes a dive as well, that’s when you’ll want to cash in and go long on Wal-Mart. At the time, it would seem like a horrible move, but Wal-Mart still has tons of market share to protect. If you can hold onto Wal-Mart long enough, you’ll make a killing. On the other hand, if you look at the financial statements, you’ll see that Wal-Mart is actually doing quite well, so in reality, it’s not a bad move at all.
So there you have it. When you’re afraid of falling and could surprise in price, take advantage of the fear and buy long on strong stocks. That way, when the market rebounds and the fear gets released, you’ll be ready to cash in and ride the wave. You’ll also be prepared for the time when the fear gets released and the market takes a nose dive, because you’ll be able to weather the storm and ride out a rough time in the markets.
