The whole point of investing in stocks is to choose one that has the greatest chance of a rising share value. Don't we all look for a stock that we could buy for $10 and later on sell for $300 per share? Well, how can we proceed to accomplish such a feat? What would make a stock rise so much?
So if the company does well, its stock will go up in price and if the company does poorly its stock will go down in price. Buying a stock is essentially buying a small piece of the company and its future potential for growth and profits.
The marketplace is in fact buyers and sellers, individuals and organizations that want to buy stocks or sell them. Now why does the stock goes up and down with the performance of the company. Actually the real force behind the stock rise and fall is the market place.
If there are more buyers of the stock, its value will go up and if there are more sellers in the market, the stock price goes down. This buying and selling of stocks can only take place in exchanges like the New York Stock Exchange and over the counter markets like NASDAQ.
Sometimes you will find that the company does well and is posting good quarterly earnings but still its stock price goes down. What's the reason behind this? Now it doesn't mean that if the company does well and is showing good profits and earnings, its stock price will go up.
Stock price goes up and down because of what the buyers and sellers expect will happen with the company in the near future. In reality the price of stock depends on the investor's expectations. The price of a stock goes down because there are more sellers than buyers. So why is it so? The stock price does not go up or down just based on the company's present performance.
In the short term, the behavior of the stock price is irrational and it can behave in crazy and illogical ways. However, the performance of the stock and the performance of the company over the long term have a logical relationship.
Focus on finding companies that are strong, well positioned in the right industries and have solid fundamentals like a good management, good product, good service, growing industry, rising sales, increasing profits and so on. The bottom line is don't worry about the short term gyrations of the stock price. Sometimes the industry and the economy matters more than the company. Picking a stock doesn't happen in a vacuum. Understanding the company's industry and the overall economic environment is critical to stock picking process. - 31391
So if the company does well, its stock will go up in price and if the company does poorly its stock will go down in price. Buying a stock is essentially buying a small piece of the company and its future potential for growth and profits.
The marketplace is in fact buyers and sellers, individuals and organizations that want to buy stocks or sell them. Now why does the stock goes up and down with the performance of the company. Actually the real force behind the stock rise and fall is the market place.
If there are more buyers of the stock, its value will go up and if there are more sellers in the market, the stock price goes down. This buying and selling of stocks can only take place in exchanges like the New York Stock Exchange and over the counter markets like NASDAQ.
Sometimes you will find that the company does well and is posting good quarterly earnings but still its stock price goes down. What's the reason behind this? Now it doesn't mean that if the company does well and is showing good profits and earnings, its stock price will go up.
Stock price goes up and down because of what the buyers and sellers expect will happen with the company in the near future. In reality the price of stock depends on the investor's expectations. The price of a stock goes down because there are more sellers than buyers. So why is it so? The stock price does not go up or down just based on the company's present performance.
In the short term, the behavior of the stock price is irrational and it can behave in crazy and illogical ways. However, the performance of the stock and the performance of the company over the long term have a logical relationship.
Focus on finding companies that are strong, well positioned in the right industries and have solid fundamentals like a good management, good product, good service, growing industry, rising sales, increasing profits and so on. The bottom line is don't worry about the short term gyrations of the stock price. Sometimes the industry and the economy matters more than the company. Picking a stock doesn't happen in a vacuum. Understanding the company's industry and the overall economic environment is critical to stock picking process. - 31391
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. Try these cash printing Forex Signals from heaven. Discover a revolutionary Forex Robot System!
