Factors That Affect the Rise and Fall of Stock Prices
Factors that affect the rise and fall of stock prices are numerous.
Stock markets are always on the move - either up or down. They are on no
account inactive. But you may not be at a position to forecast which
stocks will move and when. To have a detailed understanding of the
functioning of the stock market as a whole, it is first necessary to
know the Bulls from the Bears.
The Factors
Be up to date with the actuality that it is impossible for any person to
point the stock market. It is a subject of unconditional options. A lot
of factors - economic, political, natural and social have an important
role to play in instigating the sudden ups and downs that the stock
market experiences.
The factors in detail:
Economic Factors
These are the most important of all the factors that have been affecting
the stock market. Unlike the other factors that affect the stock market
once in a while, the economic factors can affect stock prices and the
stock market as a whole every minute! A lot of economic factors can
drastically change the stock market scenario. Factors like upward or
downward drifts in currency value are enough to instigate an urgent
purchase or sale of commodities. The Government's fiscal policies also
have a lot to do to affect the stock market as a whole, and stock prices
individually. Even economic grants or sanctions have a lot of say in a
country's economy and ultimately stock prices.
Political Factors
A lot of political factors also can drastically change the market
scenario. Political factors like changes in government, changes in a
country's diplomatic relations with another, and even a foreign tour by
a diplomat can have a profound effect on the country's stock market. We
all must comprehend that a country's economy goes hand in hand with its
political stability.
Natural Factors
Natural factors, often classified as 'Acts of God' have a definite
impact on stock prices. Natural factors such as earthquakes, floods, or
any other form of devastation usually have a parametric and adverse
effect on the share prices and the stock market en bloc. But these are
mostly unavoidable as well as fairly unpredictable.
Social Factors
Even social factors may have an impact on the prices of stock of any
company. Factors like strikes, closures, etc all have an adverse
consequence on the stock prices.
The solution:
Well, the only solution is to BE CAREFUL! A little watchfulness will
save you a lot of money and, more importantly, save you a lot of
trouble. Try dealing in Exchange Traded Funds (ETFs). An ETF is a number
of stocks grouped together by their themes and traded as a single stock.
ETFs normally pay well if vigilantly handled. Never get alarmed and sell
when the stock market is dwindling. Stock prices will surely recover
over a period of time. You just need to have the patience to wait and
observe.
The Bulls and the Bears
Bull Market: A bull market is one which has been showing a consistent
upward trend over a period of time. It shows the growing confidence that
the investors are beginning to have in their stocks. Such a bullish
situation virtually guarantees a future stock price increase.
Bear Market: A bear market is one which has been showing a consistent
downward trend over a period of time. It happens when investors are
vaguely pessimistic about their stock prices and start selling their
shares aggressively. At this instant, no matter what you do, by no means
overlook the crucial reality that a share market is never absolutely
predictable and may often act in an out of your depth way and not in the
anticipated fashion. Always keep your eyes open!
About the Author:
This little article might have helped you in understanding the
factors that affect the rise and fall of stock prices.
