Why do stocks go down

Why do stocks go down?

If the companies earning is below the average yearly earnings or weak cash flow of company's profit or just a earning due to one time sale of a certain branch of company in a not so profitable branch or area of the company.But sometimes it could be affected by external factors such as change of President, recession and others.

Below the predicted net income

Sometimes companies tend to for cast a bigger earning to entice the investors.When they cannot meet their target quota, the stock usually drop.Because shareholders always rely on how much is the expected income from year to year.When the for casted income is not met, It means the dividends and the stock price will also be lower

Selling by companies executives

How can you sell a product if your not using it? if companies executives unload their companies share, it might raise suspicion that a company is in bad shape. They will never sell their shares as long as the company is healthy.Executives have higher dividends.Why would you sell if its giving you income , unless company is in bad shape??

The sector is not profitable anymore

Sometimes even if the company is healthy but the sector is not to profitable anymore, like the Finance sector.Even if the some financial companies are not invested in sub prime, they can easily be drag by other companies affected by the financial crisis.Sometimes bad publicity can overwhelm that sector and investors shy away from this type of investment.Sometimes their product has not been able to adapt to the new trends.

No dividends or low dividends

Company paying dividends can attract a lot of investors, As for myself i always check if that company is giving a dividend before I buy there stocks.The fact that company is paying a dividend, the company is making a lot of profit.

Conclusion

You should always check out the company before buying and always be on guard if you have already bought shares from this companies.