How to Know When a Change in Stock Price Means You Should Invest in or Avoid a Company Exercise critical thinking before jumping at the chance to invest.
By Phil Town
Opinions expressed by Entrepreneur contributors are their own.
In this video, Entrepreneur Network partner Phil Town discusses the impact of certain events on a stock price, and whether those events can be helpful or destructive.
There is a definite difference between an event and a downfall. Events are triggered by fear when investors fail to consider long-term consequences. Stocks typically go on sale, explains Town, because something inspires fear in the marketplace.
A company on sale is a great investment opportunity only when it shows promise after an event -- and not because it is in jeopardy of crashing and burning. An intelligent investor thinks about how recent events and geo-political moments affect and dip the value of stocks.
Though popular knowledge likes to think that a stock's price is equal to its value, smart investors realize this is not always true. Warren Buffett thrives on the long-viewed approach of finding companies at a discount and sticking with them as they grow.
Click the video to hear more about the distinction between stock events and dangerous downfalls.
Related: The Main Reasons Recessions Happen
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