Equity Value Determinants
Most investors are aware of the market capitalization of the thumb rules, when the stock price is high, they will deliberately sell the stock. But few people know the factors that determine the value of the stock. In order to make a wise move in the stock market, investors need to know the reasons for stock price volatility. This allows investors to have the ability to underestimate the market and choose the right stock to make his portfolio strong.
Investors need to comply with this fact, no matter how strange, news media channels in determining the value of the flow of stocks play an important role. News on specific issues such as corporate policy or change in management can raise or fall the share price of the company concerned. Similarly, news on general issues such as interest rates, inflation or employment rates can also affect share prices.
When we look at the basic operation of the stock market, the supply and demand of the company's shares as a price determinant. This theory of supply and demand is easy to understand, but there are still many factors affecting the supply and demand forces.
When we discuss the value of the stock, we must consider the internal factors that affect the company's market demand and supply and the value of the stock. Companies listed on the stock market are judged by internal factors such as quarterly earnings, management skills, and growth prospects. Any company that reflects the positive connotation of all these factors is attractive to investors, so the demand for it is quite high. This greatly increases the share. When a company's growth prospects are good, and vice versa.
However, investors need to consider external factors, or consider the general factors that affect the value of the stock. By explaining the general factors, I will focus on economic parameters. Economic conditions Healthy healthy economy makes stock market effective. If a country's economic and economic factors interest rate, inflation or gross domestic product changes, then immediately affect the stock market. If these key factors change, will also affect the listed company. Therefore, the stock price of these companies will also be affected.
Investment in the stock market is not a purely gambling, it is a sustainable management of listed companies to support the portfolio management, the economy.