Question: After buying some shares, the price keep on falling. The company is doing well - there is no bad news. "Why is the price falling?"
Basically, share price movement depends on demand and supply.
When demand exceeds supply, the price will rise.
When supply exceeds demand, the price will fall.
The price movement is thus determined by all the investors and speculators in the market. The instantaneous action of the aforesaid will propel the price of the shares in a particular direction - up or down.
Movement of share price = Demand vs Supply
Demand > Supply = Share price rises
Supply < Demand = Share price falls
Thus when share price falls, it means there are more sellers than buyers.
Ref: Making Mistakes in the Stock Market by Wong Yee
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
Saturday 18 October 2008
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