Stocks That fall very low from very high

[jas1n]

What are the cuases of this? How can a company that has been doing great for years go from 50.00 to 4.00 in a matter of months? Are these stocks bargains or are they very risky investemtns that may go nowwhere and lead to a total loss? Other than the drop in price they look like a good company. Just want some understanding in this.

[netwrangler]

What are the cuases of this? How can a company that has been doing great for years go from 50.00 to 4.00 in a matter of months? Are these stocks bargains or are they very risky investemtns that may go nowwhere and lead to a total loss? Other than the drop in price they look like a good company. Just want some understanding in this.The price of a stock is, of course, determined by supply and demand in the marketplace.

The question I think you are asking is, "How can I tell if the price of a stock is above or below what it 'should' be?"

There are a number of somewhat rigorous approaches to answering that question.
Here is a Wikipedia link to get you started in that direction. (http://en.wikipedia.org/wiki/Stock_valuation)

But you can do your own "fundy" analysis by asking some common sense questions:

Are they making any money?
Will they make more money in the future?
Do they own valuable assets?
Do they owe a lot of money to others? Will they need to borrow more?
Does 'management' have a clue about what they are doing?

If you can answer these question about a company, you can usually puzzle out where their stock price 'should' be.