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Causes of stock price Fluctuations

Causes of stock price Fluctuations. How do you grow your money. Cash into a savings account Mutual funds - An investment vehicle that is made up of a pool of funds, securities such as stocks, bonds, and money markets.

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Causes of stock price Fluctuations

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  1. Causes of stock price Fluctuations

  2. How do you grow your money • Cash into a savings account • Mutual funds - An investment vehicle that is made up of a pool of funds, securities such as stocks, bonds, and money markets. • Certificate of deposit – place amount of money in the bank then earn a specific amount of interest after a predetermined time • Bond – guaranteed money after a specific amount of time • Stock market – significant growth can be expected over a long period of time

  3. Temptation • As a long term investor, you don’t want to get caught up in day-to-day stock prices. • The media and the I-net may make it tempting to sell. • The recent economy could scare some with: job loses, inflation, record breaking oil prices, declining home values

  4. Factors affecting stock price fluctuations • When investors expect companies to grow – they will purchase stocks • Supply and demand – the more popular in demand stocks are the higher price stocks • Bull market – when stock prices are rising and manufacturing is growing • Bear market – stock prices are declining and manufacturing is declining • Volatility – compares how much “rollercoaster” action a stock demonstrates

  5. What brings value to a stock • Earnings projections – every quarter a business predicts how much it will earn the coming quarter • New products • New management • Change in business model – the way a company does business - Krispy Kreme in grocery stores, Mc Café • Acquisitions – when one company buys another, the acquired company sees the stock price increase • What the analysts say • Being added to or removed from an index (S&P)

  6. Outside forces affecting company’s stock price • When the industry is growing as a whole • The economy – during tough economic cycles, people tend to shy away from stocks -People do not have the discretionary income available • Stocks closely tied to the economy – cyclical stocks – home building, cars • World events - 911, economic crisis, politics, etc.

  7. What is a bear market? • What is a bull market? • Are we currently in a bear market or a bull market? • Give some examples in how an investor can grow his or her money? • Why is the stock market more risky than other investment options. • Why do investors play the stock market when there is the potential of loss? • Why is stock purchasing often avoided during a recession? • What brings value to a stock? • Describe the term volatility. • How does supply and demand affect stock prices?

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