Tuesday, September 13, 2011

What cause the share price going down?

Every day, share price change up, down or stay side way. What cause the share price to change? In fact, nobody really know the answer, even the experience traders.
Some special event, like financial crises, those experience know share price will go down, but they can not predict how much it will go down and when it will end.

If you treat share as “goods”, most probably the supply and demand cause the share price to change. More buyer will create higher demand, then the price will going up. In the normal circumstances, demand = supply, hence share price will stay flat. In the event if the market is full of negative news, it create more seller, meaning supply more, the price is under selling pressure and tend to move down.

The funny thing is, share is not something necessity, it's not something everybody need in daily life. Today's buyer can become tomorrow's seller. If a country spark a war, everyone will become panic as because they only want to hold cash. This will hammer share price to become historical low.
There are many events such as politic, economy, investment opportunities available, currency change, company's profit and loss status, inflation and interest rate will give impact to share price. All these will give marks to a share price, be it positive or negative marks. Since every thing is unpredictable, hence, predict the market's moving is a waste of time.

Share market is a big ocean, it's full of jaws and crocodile, don't ask me who they are? They could be you or me or any business men. Times come, the business man would like to press down the price to force you sell him at low price. Some other time, the business man would raise the price to ceiling high in order to sell you at high price. Investor need to act like a business man, investment is actually similar to doing business, price is what you pay, value is what you get. Sell to others when the price is high and buy from others when the price is low. If you can do that, then your journey of life is full of gold along the way.

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