Educational articles

How does the housing market affect the share market?

The housing market and the stock market are two distinct financial markets, but they are interconnected, and changes in one can have an impact on the other. Here’s how the housing market can affect the stock market: 1.Wealth Effect When the housing market is booming and home prices are rising, homeowners often feel wealthier because the value of their homes is increasing. This can lead to increased consumer spending and investment in the stock market. When people feel wealthier, they …

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Characteristics of a risky stock

Out of the asset classes of cash, bonds, property, and equities, the latter is considered by most to be the riskiest investment. However, investors can identify stocks to match their risk profile by evaluating the level of risk by looking at the debt, market cap, profitability, age, and sector of that company. Large company debt Companies which have large debt numbers on their balance sheet are riskier than companies that have lower debt levels. To calculate the debt ratio, you …

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Value investing versus technical investing

There are different types of strategies investors can use to trade on the stock market. Two common strategies are value investing and technical investing.  Value investing is a strategy where the intrinsic value of a stock is evaluated and stocks are bought using fundamental analysis. Value investors like to buy stocks that are underpriced in the market. Technical investing looks more at the price action of the stock. By analysing price movements investors can weigh up the probabilities that a …

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What does a fall in share prices mean for the companies?

Most investors would know that just because a listed company’s share price changes daily, it doesn’t necessarily mean that anything fundamental has changed on that particular day. Listed companies originally receive funds when they sell shares through an Initial Public Offering (IPO). It is within the secondary market on the stock exchange where the share price is determined by the interest between the buyer and sellers. However, even though a company does not directly lose money when their share price …

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What does GARP mean?

Investors looking to obtain a balance of growth investing and value investing should think about the strategy known as the Growth at a Reasonable Price (GARP) trading strategy. This strategy looks to combine both growth and value investing. Definition Growth at a reasonable price (GARP) is a strategy that combines growth investing with value investing. Stocks which fall into this group are companies that demonstrate good growth potential in the future but they are not too expensive as these have …

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