How Stock Exchanges Are Run - a Few Words of Wisdom
Monday, August 31st, 2009Understanding the stock market is more art than science. Which reasons cause increases and decreases in stock prices? The basics of economic supply and demand is obviously a major driving factor. Shouldn’t it be as plain as whether or not a company is losing or making money, and how much and at what rate? Sounds like it makes sense, but it’s not all that easy. The only simplistic thing that can be said is that a stock price is based on what people are willing to pay for it. And true - if a company is reaping profits its stock price is likely to rise, because profitable companies are more likely to pay dividends, or their stock price will increase because more people will want to own it and the possibility that what was bought at a lower price can be sold again for a much larger amount and with this you make profits from your stock trading.
It is usual to hear bragging stories of how some person’s penny stock picks turned into a money tree and increased highly in value and made someone very rich. But is this all true? There are also stories circulating saying that for each case of attempted penny stock success there’s failure waiting to happen. Luckily, that is not really the case either. Penny stocks should not be discounted. By no means. It’s just an aspect of stock trading well worth considering that has a certain degree of risk that every penny stock trader should have a knowledge of.
If you are on the hunt for high dividend stock you should be trying to find stocks with a small debt, and a high forecasted yield level. Surf through financial sites like Yahoo Finance or Google Finance so you can filter stocks by their dividend yields.
Full-service brokers are generally adept with assisting you with these and other topics: how to buy stocks. If you like, they can give you all kinds of stock market related tips and advice. You can employ their services to manage most aspects of your portfolio and give tips whether to buy or to sell. On the other hand, using discount brokers, you still need to rely on yourself to know whether it’s good to buy or sell. Online brokers on the other hand, they are relatively cheap but still you’re very much on your own. But, if you do your own research and are savvy enough, it is a very good option.
The news can also have a great impact on a stock’s price. If the media just announced that a certain corporation has just devised a better mousetrap that will rule the mousetrap market, it is more likely that their stock prices will skyrocket. Likewise, if the CEO of a publicly traded corporation got his name involved in a scandal, it won’t be far-fetched if the stocks goes down.