Investing Advice

Four Things that Affect Stock Valuation

  • Overall market
    Often quoted is "all boats float up or down with the rise and fall of the tide", but the stock market is not pulled up or down by the moon (at least I don't think so). When the market is going up, 2 out of 3 stocks are rising. When the market is going down, 3 out of 4 are tanking with it.
  • Industry
    There are market sectors, such as financial services and health care, that traditionally do well. One year it may be coal (yes, in 1964), another year technology (most of 1990s), or gold (2002).
     
    • Companies within an industry
      When many companies within an industry are doing well, they tend to pull the rest of the companies in the industry up with them. When they are failing, they tend to pull related companies down with them.
       

    • News - Visibility
      When a company is in the news with new, leading-edge products, its stock price will generally rise. But watch out for a quick reversal on ANY bad news.

    These all contribute to investor confidence, which is necessary to generate more buying than selling.

    Remember, except during a bear market, if a company's growth meets the market's expectations, the share price will either stay about the same or move higher. If the company or the company's industry disappoints investors, the share price will go down.

    Other Stock Market Basics Topics:

    1. Stock Market Investing the Right Way
    2. More Stock Marketing Investing
    3. How to Pick Winning Stocks
    4. The Golden Rule of Investing
    5. Avoid Psychological Traps to Have Successful Investing
    6. Changes in Stock Values Can Be Big Numbers
    7. How to Invest Smart
    8. Stock Advice - Important Selling Rules
    9. Poor Stock Buying Decisions
    10. Market Indicators
    11. Stock Market Cycles
    12. When a bear stock market may not be a bear market
    13. Stock Index Futures
    14. Four Things that Affect Stock Valuation
    15. What is a P/E ratio?
    16. Value Investing
    17. Cheap Stocks
    18. What is a Financial Statement?
    19. Analyzing Financial Statements
    20. Stock Market Tip - Red Flags to Look For When Investing?
    21. The Annual Report How to Read
    22. Stock Market Analysts Stock Market Advice and Tips

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