LooseSuits

9rules' very own eCommerce Cache has a great answer.

I personally think the market always tends to overreact to news be it good or bad. Down swings may be buying opportunities but I'd only jump in if the company's fundamentals are solid.

cmarsh - keep in mind that often times, how a company performs and how a companies stock performs are two very different things. The market is always looking for growth in a stock/company (consider it the holy grail of the stock market). Even if the company is rock solid in terms of their business model and revenue, should they fail to find a way to grow over the next quarter or year to the expectations of the market, then the stock could see some bumpy road ahead. Does this mean the company is struggling - maybe yes, maybe no. But my point is that the company stock is not always an accurate reflection of how the company itself is doing but rather how they are doing with respect to how the market thinks they should be doing.

Oh and if you want a good example of this then check out Rackable Systems (RACK). Recently announced great earnings but in the conference call they hinted at the slightest slow down in growth and possibly not being able to make the guidance expectations of the market for the rest of the year. Stock gets hammered for 40% today. A company whose earnings were as good as they have ever been, see's the stock tumble 40% because of growth concerns.