Newbie Question

[RNRMM2006]

I am totally new to online trading so I am finding out as much as I can. I do have one question so please forgive me if it is totally stupid. Here goes. Say I buy some stock at 5 dollars a share but the company is in the red. Later the stock moves up to 7 dollars a share but the company is still in the red. My question is can i sell the stock and make a profit even if the company is still in the red? Thanks for any help on this.

[Thierry Martin]

The stock price reflects the amount of money people are willing to pay for a certain percentage of the company. If there were 100 shares in existence for a particular company, and you owned 10 of those shares, you would own 10 percent of that company's publically traded stock.

Now, the price of that stock may be affected by the company being "in the red," but let's say the company will be losing money for the next few months while it is building a new product, and that product could make the company very successful. The price of your stock could very well go up, since many people may want to buy shares in this company even though it is losing money.

[optimus25]

I use to be new at investing so I know what you mean.

Here is an equation using the numbers you provided:

Buy 100 shares of a stock at $5 = $500 (minus commission of course)

Stock moves up to $7

Sell 100 shares of a stock at $7 = $700

$700 - $500 = $200 in profit or 40% return.

A company being "in the red" has nothing to do with you making money. There have been many stocks operating in the red which made investors a ton of money.

[RNRMM2006]

thank you for your help. signed randall