Stocks / Shares
The Primary Factors that Influence Stock Share Prices
Article by Terry Mitchell
Although everyone seems to know the main rule for investors is to buy low and sell high, not nearly enough people are aware of the factors influencing stock share prices. Share prices increase and decrease as a response to news. This news can either be broad, as in the case of changing interest rates, or specific news pertaining to one company. No matter whether it is broad or specific, news influences the price of all shares traded in the stock market.
Also at the centre of stock markets are the basic economic concepts of supply and demand. The more people wanting to buy shares of a company, the higher the demand and the increase in the share price. This increase in demand drives the share price up as there is only a limited supply of stock available. Conversely, once the demand for the shares drop, the supply is increased and there is downward pressure on the share price.
The Internal Factors that can Influence the Demand and Supply of Shares
Among the internal factors that can influence the demand and supply of a company’s shares are the attractiveness of the company itself, company news and announcements, as well as the performance of the overall sector that company is in. A listed company which shows consistent returns, good growth prospects and has good management will attract investors and in so doing increase the demand for its shares. In the same token, positive company announcements such as the company’s profits doubling will also increase the share price.
Negative company announcements that portray the company or their key players in a bad light, whether it be exposing scam or revealing a drop in profits, will result in the share price plummeting. Another related factor would be the performance of the overall sector that company is in, e.g. retail, manufacturing, property etc. If any of these overall sectors are experiencing a major slump as a result of the current recession for example, it will create a snowball effect on most of the companies in that sector.
The External Factors that can Influence the Demand and Supply of Shares
Share prices could also be affected by external factors such as economic trends, globalization and Geo-political events. Economic trends like inflation and GDP could directly impact stock markets thereby affecting the underlying listed companies. Globalization has created more interconnected stock markets thus resulting in the performance of major overseas markets having an impact on local stock markets. Geo-political events, such as terrorist attacks could also cause share markets across the world to move up or down.
Unfortunately, there is no way to be absolutely sure that as investors you will be successful in buying low and selling high. It is however vitally important that you keep abreast of economic and political events happening throughout the world. By being proactive and aware of the factors that may have an impact your share prices you will increase the chances of preserving your wealth and becoming a successful stock market investor.
Singapore stocks-down by midday on Europe; banks extend fall
Stocks / Shares
Around 0500 GMT, the stock was down 3.8 percent at S$ 1.635 with more than 42 million shares changing hands. Singapore bank stocks also dipped, with DBS down 2.5 percent. United Overseas Bank and Oversea-Chinese Banking Corp lost 1.8 percent each. …
Stocks / Shares question by Emmanuel: How many stocks(shares) to begin with?
I am nor rich neither a professional trader. I started to buy stocks(10 shares for now with citigroup). There is n way I can invest a big chunk of money at one time but i believe i can at least buy 5-10 share per month. Do you think this can end up producing money or it is going just to be a waste of money and time.
Thanks for helping
Stocks / Shares best answer:
Answer by Stephen T
You need to remember broker fees and they could eat up a huge chunk of your money.
if you invest with someplace like e*trade of Sharebuilder you’re looking at 7 or 10 dollars per trade, so for 10 shares of Citi – its $ 30 with a $ 10 commission. Not worth it. I would recommend that you wait until you have some more money to invest.
My friend, the best way is to buy into a company that pays dividends this way as dividends are paid you can add to your shares plus add to this the money that you can add to your account ! – I mean dividends that pay
12 % 13 %, not the 3 and 4% that many companies offer as if this was the greatest gift around — Make your money work for you, not for the bank and their directors ! Access in your computer ” Canadian Trusts ” and you will ape when you see the interest, royalties paid monthly or quarterly study them and compare – At least 5 years in the market with good management – -
I started as a teenager with several DIRECT INVESTMENT PLANS… they are dividend reinvestment plans that allow you to make the first purchase directly from the plan administrator. You have to SAVE YOUR STATEMENTS because keep track of the cost basis of all the reinvested dividends can be tricky. Eventually I had enough shares (and free cash flow) to in several companies to have them electronically transferred to a Scottrade account. Do an internet sure or check out computershare.com