Here's a case of a huge crash when a company's earning report disappoints.
Yesterday morning, I logged into my brokerage account as I always do in the morning while drinking my tea. It's a ritual to see what's going on, whether I will be trading or not. Saw that I had a 5-figure drop, while the market was flat. What the heck?
Discovered that a holding of mine had a big 30% drop! Uh oh! They reported earnings, and it only matched expectations. I did not see that their look-forward statement was bad, but they were not gun-ho. The stock continued to slide down during the day. Today, it recovered a bit.
I bought this stock after the 2009 crash, and at this point still have a 3.5x gain. As of pre-earning, the gain was almost 5x. I am not selling and will hold it, as the P/E is now not expensive at all, and even cheap compared to the S&P average.
This is a small-cap technology company, and hence is extremely volatile. As a rule, I keep all my positions, particularly of small companies like this, at 1 or 2% of portfolio for each individual company. Else, would make a lot of money, or lose a huge amount.
Yep, risk and reward go together. No such thing as risk-free returns. Yet, return-free risks are always available. There's that asymmetry in life. Life is never fair.