Making Sense of Stocks
Terry Daniels has been investing in the stock market for over 20 years. He recommends (http://www.a1stockpicks.com) for your stock questions and needs.
Distributed by http://www.ContentCrooner.com
The stock market can seem very intimidating and can make a lot of people stray from investing their money with stocks. Recently the stock market has seemed to be very volatile making it even more forlorn.
We are constantly hearing about the stock market going up and down. We know that it is good when the stock market goes up and that it is bad when it goes down.
Recently there has been a lot of news about the losses in the stock market because the stock markets have been so low. Understanding how the stock market can go “up” and “down” will help the stock market be a little less intimidating.
The stock market is driven by the laws of supply and demand. Supply simply means how many stocks are available and demand clearly means how many people are looking to buy a specific stock.
If more people want to buy a stock, which we know is demand, than people that want to sell it, which we know a supply, then the price moves up. So, as demand increases supply will decrease and price will increase.
This makes a lot of sense. We see examples of this in our everyday life.
If there are any commodities that lots of people are looking to buy, the prices go up. Whenever a reputable company releases a new product the demand is usually high.
The demand is high, so the company can afford for the price to be high. When the hype of the new product begins to die down the demand begins to decrease and the prices then decrease.
The opposite scenario also proves to be true. If more people want to sell a stock than buy it the supple would be greater than the demand, and prices would fall.
We can also see examples of this all around us. What happens to the extra commodities in any store? They always end up on sale or in the clearance bins, because the supply was greater than the demand.
Supply and demand are very simple concepts to understand if you can relate the concepts to your everyday life. Now that supply and demand is clearly defined, the next question would be what makes people like one stock better than another?
If everyone liked all stocks equally than the demand and the supply ratio would never change. There has to be some fluidity in the market for it to be a lucrative and risky way to invest money.
If you have an idea about what people like in a stock and what people dislike in a stock then you will have a better understanding of what stocks are going to go up and which are going to go down.
This idea is how brokerage firms make their money. They study the trends of the stock markets and they learn about different stocks so that they can preemptively buy and sell stocks for their clients.
If they have a good knowledge on which stocks will rise and which will fall, they can invest their client’s money likewise and make good money. This process is never a sure fire process and will always carry some risk.
Watching and interpreting the news will give you a sound understanding of how the stock market trends are going to go. The key to this method is being able to look for the right news and interpret it correctly.
News that will negatively affect a company will make the stocks go down. News that will positively affect a company will make the stocks go up.
The number one factor in a company that affects the value of the company and its stock prices are the company’s earnings. Earnings are the profit a company makes; no company can survive without some earnings.
This is also a very logical statement. No company can continue to do business if they do not make money.
Every company that has gone public and is selling shares must report their earnings four times a year. When you hear quarterly earnings referred to, it simply means that the company has reported how much money they’ve made during one fourth of the year.
If a company’s earnings are better than expected then the price in stock will increase. If the earnings are less than expected then the price of the company’s stock will decrease.
No one can completely understand how the stock market is going to rise and fall. Having an understanding of what effects the prices of stocks will make the stock market much less intimidating.
Service Availability: Most services reviewed by this websites are available in the United Kingdom. This includes the following cities and their surroundings: London, Birmingham, Leeds, Glasgow, Sheffield, Bradford, Edinburgh, Liverpool, Manchester, Bristol, Wakefield, Cardiff, Coventry, Nottingham, Leicester, Sunderland, Belfast, Newcastle upon Tyne, Brighton, Hull, Plymouth, Stoke-on-Trent, Wolverhampton, Derby, Swansea, Southampton, Salford, Aberdeen, Westminster, Portsmouth, Oxford, Newport, Norwich, Cambridge, Gloucester, Bath, Canterbury and others.