Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
in the shares; for example, good earnings or good sector outlook. The following is a list of some additional reasons why a certain stock may move up in price. This list is not necessarily in any order of importance.Rumors - As unbelievable as it seems, rumors sometimes have the most profound effect on a stock price. Remember the psychology factor.Many times rumors contain a trace of truth, but in most cases by the time they hit the street they are twisted and exaggerated beyond reality. Unfortunately the stock market, being the psychological beast that it is, reacts (or overreacts) promptly to these rumors and sends the stock price up. And the king of all rumors? Take over (buy out) rumors.
Government Or Other Large Contracts/Orders - A company that is able to secure a contract with a government agency or a large company (especially for the first time) would be considered a viable company worthy of a higher stock price, as this could potentially lead into better future earnings.
Real Or Perceived Low Value - Sometimes even a good (or seemingly good) stock might be forgotten by the investors. Chances are that eventually the stock will be re-discovered at a bargain price. As more attention builds around the stock, it could see a rise in its price. Your task as a shrewd investor is to find such stocks.
Company Layoffs - A work force reduction at a company is a sign of bad times, right? Not necessarily. This may be viewed by investors as a move by the company to refocus itself and become leaner. Many times investors reward the company's stock after layoffs are announced.
Reorganization, New Management - Many times a lagging company needing to get back on its feet reorganizes itself and possibly appoints new executives (CEO, CFO, COO, CIO, etc.) at the helm. This move usually plays well with the investors, who may push the stock price higher (especially if the new executives have a proven track record and may bring other experienced cohorts onboard) ….
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