The Multitude Of Factors Involved In Determining Share Prices-步步高i606

Finance If one could make an accurate prediction of the price of a specific share one month or one year into the future, you will probably be.e very rich. Unfortunately we live in a world where the future is never 100% certain. In reality there are a number of factors influencing share prices. Some of these factors can be predicted to some extent, while others will probably remain unpredictable for a long time to .e. Something that has a significant effect on share prices, and which is always difficult to predict, is a country’s political situation. A share investment in a developing country can turn bad overnight if there should be a military coup. If you had known about the coup, of course, you could have "shorted" the investment and made a huge profit in the process. Most of us probably don’t think the weather can play a major role when it .es to share prices, but it can do. If your money is invested in a .pany that has a number of farms producing e. g. Tobacco, a severe drought will have a very bad effect on their profits. This will in turn have a negative effect on their share price. And to predict something like this is very difficult. Financial experts and economists employ mainly two kinds of indicators when they attempt to predict future prices of shares. The one group is called technical indicators and are mostly used by short term traders/investors. The other group consists of the so-called fundamental indicators, and most fund managers and long term investors prefer to use them when trying to make a forecast of future share prices. A fundamental indicator refers to something that plays a key role in the price of a trading instrument, such as a share. An example of this is the inflation rate. Another example is the exchange rate of the country’s currency. Other examples are per capita in.e, Gross National Product and imports and exports. A technical indicator refers to some or other statistical formula we use to calculate recent price movements and their expected effect on future prices. One of these is the so-called moving average. When the price of a share as an example starts trading above its moving average, it’s generally interpreted as a sign that the price will increase even further. Other technical indicators include Bollinger Bands, Price Oscillators and the RSI. Even if you have a list of all the factors that will play a role in determining the price of a particular share, you still have to assign a weight to each one. There will always be questions that are difficult to answer. Will the inflation rate have a bigger effect than the exchange rate? Will the negative political situation be offset by positive economic growth figures? Only if we knew the answers to all of these could we 100% accurately predict future share prices. About the Author: 相关的主题文章: