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Why Stocks Fall After Great Earnings

Earnings season has brought some great results from many companies, as net-income gains have pointed to solid performance from a fundamental standpoint. Yet in many cases, great earnings news is followed by a falling stock price. Why aren't investors happier about positive results?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, explains how stocks can fall even after great earnings. Dan explains how AT&T (NYSE: T  ) , Boeing (NYSE: BA  ) , and Ralph Lauren (NYSE: RL  ) have all beaten expectations that investors had for their most recent quarters. Yet Dan reminds investors that the stock market is a forward-looking mechanism, and when companies like these don't give the positive outlooks that shareholders want to see, a stock-price drop often follows. Dan concludes that looking back at past results is mostly useful for what they tell you about the future, and smart investors maintain a future-looking focus in their investing choices.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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Related Tickers

10/20/2014 4:00 PM
BA $124.31 Up +1.07 +0.87%
The Boeing Company CAPS Rating: ***
RL $157.20 Up +0.95 +0.61%
Polo Ralph Lauren… CAPS Rating: ***
T $34.28 Up +0.20 +0.59%
AT&T CAPS Rating: ***

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