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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

entrepreneur daily

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

Entrepreneur Network is a premium video network providing entertainment, ewitducation and inspiration from successful entrepreneurs and thought leaders. We provide expertise and opportunities to accelerate brand growth and effectively monetize video and audio content distributed across all digital platforms for the business genre.

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Phil Town is an Investment Advisor, Hedge Fund Manager, 2x New York Times Best-Selling Author of Rule #1 & Payback Time, and Ex-Grand Canyon River Rafting Guide. Rule #1 Investing is Warren Buffett style investing, teaching you how to buy businesses on sale, with little risk and 15 percent returns. In fact, Rule #1 investing is practically immune to the ups and downs of the stock market.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

More from Phil Town

How to Find a Stock On Sale That's Right for You

3 Bad Investing Habits You Should Drop Before It's Too Late

Nervous About Investing? Think About Your Money This Way.

How to React When a Recession Is Approaching

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