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Why Do Stocks Sell-Off Even if an Earnings Report is Great?

April 21st, 2015

As we approach the earning season, if you've watched the market (even for just a few months), and you've seen previous stock report earnings, you'll start noticing that they start behaving erratically and in ways that don't make sense.

You may think a stock will do phenomenal on earnings (and it may!) but what happens to the stock is that it actually starts to sell off. Alternatively, what you may see happen is a stock that has horrible earnings but actually goes to the upside!

So why does this happen?

A stock's price movement after earnings is based on expectations and not on directly on the earnings that were reported. It's based on the big money managers/institutions project earning in the future as well.

2015-03-11-stocks-sell-off-z.0069

If certain money managers expected a stock to rocket and it didn't reach that expectations - it may start selling off, when in reality - it actually did pretty well overall. Tailor your expectations to what you're looking for in a stock rather than relying 100% on a money manager or institution's take on the stock.

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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