Investors who buy the stock can have variety of reasons, and that reasons would not be the same from one investor to another. They buy and sell stocks according to their strategy and needs on daily basis. The fact is, there are traders who make living out of stock trading. Therefore, the price will fluctuate based on their trading activities. Moreover, seasoned investors have stock trading software to predict when is the best time to buy or sell for maximum profits but at minimum risks.
These records revealed that gains are realized quickly by investors than the losses. Their behavior was not justified by portfolio performances. Odean found out that volume trading in stock market is excessive. Average returns of investors decreased due to brokerage. According to Odean.
The reason why we're investing in the stock market volatility is for the reason that we identify the huge potential returns. But we are in the time of liberally traded markets and that is focusing the desire of the sentiment investors. When cash is concerned, feelings might sometimes be great. We have turn out to be stock market investors, because we realized that not just is there no simple cash, and also that the stock market volatility would do it is extreme to free us of our money. We are much uncomfortable with the approach of the buy-and-hold investment, and realize that if the purchase-and-hold might be very well if you are willing to remain twenty to thirty years, it frequently leads to loss from shorter durations.
Advantages: The advantage of moving average system of this type (i.e., buying and selling when prices break through their moving average) is that you will always be on the "right" side of the market: prices cannot rise very much without the price rising above its average price. The disadvantage is that you will always buy and sell some late. If the trend does not last for a significant period of time, typically twice the length of the moving average, you will lose your money. Support and Resistance: Support and resistance represent key junctures where the forces of supply and demand meet. In the financial markets, prices are driven by excessive supply (down) and demand (up).
The authors use the ban on short selling in September and October, 2008 as an example of a liquidity shock to the supply of capital from convertible bond arbitrageurs. Because short selling plays an important role in convertible bond arbitrage strategies, the inability to short sell highly reduces arbitrageur’s willingness to supply convertible bond capital to firms. Overall these results can be interpreted as strong evidence that the supply of capital from convertible bond arbitrageurs impacts issuance, and are inconsistent with the view that only demand matters for issuance. Since convertible bond arbitrage funds are also active in stock markets, research on convertible bond arbitrage funds has demonstrated their important contribution to liquidity provision in stock markets. They show that certain hedge funds have an ability to time market liquidity and that this group of funds generates higher risk-adjusted performance risk for investors than other
Sometimes companies do have other alternative of giving the money back to shareholders and buybacks are an example of that, but they are inconsistent, hence we can make a little adjustment in the payout ratio to adjust the differences, which is as under Augmented Dividend payout= (Dividends+ Stock buybacks-Long term debt issues)/Net Income H Model: This model was devised to address the issue of sudden migration from Initial high growth to Stable growth rate in a 2 stage model. This model suggests that Initial growth rate does not have a sustained high growth rate but falls linearly over the period of time till it reaches a stable growth rate. This model proposes that the growth will fall linearly but the payout ratio will remain constant, which is not true,since the payout ratio should increase with decreasing growth rate. Due to this reason this model is inappropriate and does have very limited applicability. Three Stage Model: This model combines the features of earlier two models and also attempts to overcome the shortcomings of the earlier
Critics of capital or security market have argued that liquidity of stock market negatively influence corporate governance, because highly liquid stock market breeds investors myopia (Al-Shubiri, 2010). Since investors are at ease to sell their equity or shares, highly liquid stock markets is capable of limiting investors’ ability to exert corporate control on their shares (Bhide, 1994). These problems according to Al-Shubiri (2010) are further magnified in emerging countries with less regulatory systems and high volatility of
To get the knowledge about the impact of inflation is very important for an investor if it became out of control then plans may destroyed. Exchange rate and stock returns also have a relationship. Foreign depositor changes their profits on stocks into their own cash. Foreign depositor get exaggerated when local cash gets stronger and changed into weaker cash. Exchange rate show negative relation with stock returns.
It is just is what it is. Investors will not be exposed to diversification benefits by having a portfolio full of assets in one industry, market, or sector. Companies that are categorized within an industry all have similar risks, so a portfolio needs a mixture of industries. Remember, investors portfolios have to vary by industry, geographic location, and size in order to reduce company-specific risk. How to diversify a portfolio While portfolio diversification may seem like a daunting task, especially when investors do not have the time, skill, or motivation to research individual stocks or determine whether a company's bonds are worth purchasing.
2. Another risk of a property investment is that depending on the economic state, the value of the property could rise or fall. This makes it hard when you come to sell it or find another tenant, that you may have to lower your price because of competition or the economic state. This happens a lot when there is a financial crisis. This means that you may not make any profit on the investment or you may even lose money.