Stock prices are not determined according to a single strategy, and it is very difficult to predict them. Some economists say that they depend on the long term earnings of the company. Investors usually buy the stocks which they think will make profits in the future. This, in turn, causes the price of that particular stock to increase. Again, it is the demand that actually is causing the rise. However, the opposite happens when a company is not expected to make profit. Here the demand is low for that particular stock, and therefore, it causes the price to fall.
An investor buys or sells stocks depending on the business the company is doing, the financial prospects of the company and the history of the stock prices of the company they want to invest in. The interest rates also show an effect on the stock prices. If the interest rate increases, it will always decrease the stock prices as they tend to indicate that there will be a downtrend in the economy and some of the investors can shift to the investments with the interest.
PRICES
There are many other things which determine the price of a stock. Every investor has a different strategy to buy and sell stocks and they take many factors into consideration. These factors may or may not be correct.
As the market shows a huge uptrend, many investors will get into the market which increases the demand and the price. Speculators also buy the shares in order to sell them at higher rates in the future. When the prices show a continuous uptrend, then it is called a bull market. The speculators start selling the shares and the prices fall. Seeing this, the investors also sell out the shares which leads to a bear market.
How Are Stock Prices Determined?
About Author:
Kum Martin is an online leading expert in the finance industry. He also offers top quality tips like:
Mutual Fund Market, Define Short Selling
0 comments:
Post a Comment