Wednesday, October 10, 2007

Rain on The Parade or Welcome Rain That Waters the Garden?

Too many people seem to worry about the daily fluctuations in stock prices. It feels like it's raining on your parade when the stock you bought doesn't go up quickly. Sort of like having rain when you wanted to have a picnic. But look at it this way: Maybe the rain didn't help the picnic, but it did water the plants and help the garden grow.

Seriously, though.... when the stock goes up people tend to credit the company or the company execs. Then when the share price goes down, people tend to blame the company or the company execs. The truth is, that the company has had nothing to do with either scenario. Zero influence.
That should be obvious... after all, if the company had ANY influence over the stock price, well then the stock price would go up and up... and why not? What company or company exec would ever want their stock price to fall?

The stock price was low, went high, then low again. All on its own. However, I know someone who did buy 30,000 shares on the open market at 5 cents. Today, though, the share price closed at much less than that. However, this investor feels that he is still ok because he has confidence in the growth of the technology and voice over Internet (VoIP) .

However, the company has absolutely no idea if the stock will go up or down. Each investor has to carefully consider all the factors and do some homework before buying any stock of any company. It's speculative stock.

As for "raining on anyone's parade", just look around and see if you notice that plants are sprouting up and the grass is getting greener. In the longer run, maybe the rain isn't so bad after all.