The way market moves and how to profit from it |
| Written by Ben | |||||||||||||||
| Thursday, 11 October 2007 | |||||||||||||||
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Factors, many and varied, affect share prices. Below are some of these factors:-
Earnings (present and future) Mergers and acquisition Change of ownership and management Interest rates Manipulations Government policies Political unrest Lack of co-operation between countries War Natural disasters such as severe drought, floods, and epidemic Commodity prices Emotion and sentiment The above factors are forever changing. This causes the supply and demand of shares to change as well. When demand is greater than supply, prices rise. When supply is greater than demand, prices fall. The greater the difference, the greater is the velocity. When people are optimistic, they become overly optimistic. When they are pessimistic, they become overly pessimistic. That’s why shares become overpriced sometimes and under priced at other times. Smart monies know this. They are able to exploit these situations. Never get married to your stocks. When they are very much overpriced, they must be sold. You can always buy them back when they are down. Investment in knowledge will pay the most dividends. You must invest wisely to win. Happy investing.         
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