Final answer:
Your behavior in selling technology stocks due to expected price drops is driven by anticipations of future performance and market expectations. Stocks are affected by future outlooks rather than just current performance, so investors buy undervalued prospects and sell overvalued or declining stocks.
Step-by-step explanation:
If you have technology stocks and expect their price to fall, leading you to sell them, your behavior is guided by expectations about the future performance of these stocks. It's understood that stock prices are influenced by what investors expect to happen in the future, not necessarily what is happening right now. Market participants, including analysts and investors, constantly scrutinize company prospects and wider industry trends to predict future stock performance. Often, they seek companies that are currently undervalued but are expected to perform significantly better in the future.
The stock market is inherently unpredictable, with prices following a path that resembles a 'random walk with a trend' as per mathematical models. This suggests that while stock prices fluctuate daily and can rise or fall without definitive predictability, there is a general long-term trend toward growth. As a result, investors attempt to buy stocks when they believe the market underestimates the company's future performance and sell when they believe the stock is overvalued or is expected to decline.
Your decision to sell technology stocks based on expected price drops aligns with a strategy to prevent potential losses, suggesting that you anticipate negative shifts in market or company expectations which would reduce the stock value. This proactive approach to investing involves constant analysis and making informed decisions as expectations change over time.