Stocks are composed of two major valuations

Stocks are composed of two major valuations.

• First, a cash flow is created using fundamental analysis, cash flow or sales.
• The second one is determined by how much the investor is willing to pay for a specific share of stock and how much his fellow investors are willing to sell stock (supply and demand).

As investors alter the way they analyze the stock then the occurrence of the changes in these types of valuations is definite. Fundamental valuation is used to justify stock prices while the other depends on supply and demand; the more the buyers the higher the prices of the stock and vise versa.