3M is a good example not just of how a Foolish Four stock can turn around, but of how perceptions about earnings can influence the short-term price movements of a stock. First, though, let me clear up a few misconceptions about stock pricing that show up from time to time in my mailbox. The first is that people buy stock because they think the price will go up. Well, yes, and that is the way many people think about stock prices. The idea is to buy the stock so that you can sell it when it goes up.
Some people think it goes up because of demand.
Yes, that too is true. When more people are trying to buy a stock than want to sell it at the current price, the price goes up. You see where I am going. It all comes back to earnings, or to be precise, the market's expectation of future earnings. It just doesn't work that way.