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Thursday, November 6, 2008

How come Stock Market Shares fall in Value during a Recession when a Company Breaks Even?

Does this make any sense? Why does a share of stock fall in value when a company breaks even during a recession? It seems to me that breaking even in dire economic times would actually be a good thing, no?

Lets factor in that many stocks no longer give dividends out. If you own a stock that gives no dividends out, and that company breaks even during tough economic times, why should the stock go down in value?

Yes, breaking even is the new profit, and that sure makes more sense than devaluing a stock when the parent company can break even in a recession.

How many of you would have been happy if the stock market would just stay stabilized in the past 2 months? If a company isn't losing any money nor making any money during a depression, why should your stock value go down if the company is not even paying you a dividend?

When a company breaks even, that means they paid all of their obligations, paid its employees, overhead, and taxed, but didn't have enough to create additional wealth for his investors. If the company didn't lose money, why is Wall Street devaluing my stock shares?

A simple question from a simple mind. Can you answer it? The company didn't make any profits during a recession, so that must mean the stock is now worth 20% less??? Huh? Why?

It is likely that a company that can break even during dire economic times probably will do ok if and when the economy picks up.

Me thinks some people on top are kind of stupid, either by design or ineptitude. Who gets removes them from their position, and when?


Anonymous said...

Hi, I don't know the answer to your question, but I bet these people do : www.tickerforum.org


Alessandro Machi said...

I'll check it out. Thanks.

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