There are several factors responsible for pricing of a stock which decides the fate of it. It is essential that one is aware of the things and basics of a stock before they actually start investing in the market.
Four things responsible for a stocks pricing and its movement on the Index are:
- Fundamentals, Supply and Demand that aggregates indicates how the stock is viewed by the investors. Taking a close look at how the stocks fundamentals and demand supply shapes in can actually help decide an investor of either to exit or buy a particular stock.
- It is essential to look at the market capitalization and not comparing just the share price of two particular companies. The price times the number of shares outstanding gives the figure of the market capitalization which should be the basis of comparing two stocks and not just their prices on the Index.
- Generally the earnings affect the investors’ valuation for a company but there are many other indicators that help in predicting a stock’s price. It includes attitudes, sentiments, and expectations of all the investors for a particular stock.
- And the most important thing is that there are several theories that claim to predict a stock’s price but neither of them have any basis or proof of being able to do so.
Bell the bull says: Understanding a stock and factors associated with them is essential in order to help investors from being safe while investing