Question #7: My stock has declined, but I can’t find any news on it. What
caused the dip?
Answer: You may never know. First, you must realize that the stock
market reflects the collective will and opinions of millions of investors. If
enough of them decide to sell Acme Widget—regardless of their individual
reasons—the shares will decline in value.
Sometimes people sell a stock because it has performed well and they
wish to book some profits. Stockholders may also sell because shares have
begun to fall and they fear additional declines. Sometimes bad news from
another company in the industry will cause a stock to decline because the
factors driving the weakness in the other stock may affect the first stock.
And sometimes stocks sell off in sympathy—perhaps when a close
competitor has taken a heavy loss—even when the news doesn’t affect them
directly; in such cases, they often rebound quickly.
Often a company’s stock will move up or down not because of any
company-specific news, but because the market itself has taken a turn.
Remember that stocks tend to move in a pack. As with any pack, you’ll see
bold names that bolt to the front while plenty of stragglers hang back. If you
own stocks, you should expect them to decline when the larger market
declines.
Suppose the broad stock market dips 10% over the course of a couple of
months. History suggests that it could still decline further, but eventually
most stocks will recover. They always do. If your stock falls 10% in the
midst of a widespread market decline of 10% without generating any
negative news of its own, you can probably blame the broad market for the
decline.
Question #8: How do I track my portfolio?
Answer: Twenty years ago, most large newspapers printed daily stock
prices, and investors followed their investments in the paper. With the
proliferation of websites offering the same information in a more timely
fashion, often at no cost, many papers have eschewed the stock pages. These
days, the Internet simply offers more information, and a host of financial
websites do a fine job of providing pricing and trading data.
You can check out the performance of your stocks on your discount
broker’s website. While each broker does the job a little differently, they
should all show you the value of your stock positions and allow you to view
the stocks’ history—how they have moved since you purchased them.
If you don’t buy all of your investments through the same broker, use a
free third-party site to track all of your investments together. Popular
financial websites include Yahoo! Finance (www.finance.yahoo.com),
Google Finance (www.google.com/finance), and MSN Money
(www.money.msn.com). All three of those sites and plenty of others provide
free portfolio trackers. Just input your stocks’ ticker symbols, and you can
create a portfolio of the stocks you own as well as stocks you wish to watch.
Interested in more detail than today’s share price? You can also enter
the date you purchased the stock as well as the purchase price and the
number of shares. If you input your transaction data, the website you
selected will show you the returns of each stock since you purchased it—
crucial information for assessing your portfolio.
Frequent Investment Ideas.
