Educational articles

What causes stock prices to move?

There are many reasons why a stock price may move. Often a rise or decline in the share price cannot make sense to an investor and share price reactions to certain events can seem counterintuitive. Here we discuss the main reasons for share price movements. Company Reporting As we have seen during the reporting season, stock prices have moved significantly once a company has released its results. Most of time, if the market is expecting better numbers than what was …

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Dividend Basics

We are at that time of the year when many companies on the ASX declare their interim dividends. Here is what you need to know about company dividends. Why are shareholders paid dividends? When a company makes a profit, they can reinvest the profits into the company or they can distribute these profits to the shareholders in the method of a dividend. Usually, the companies who pay these dividends are mature companies and can afford to distribute the income to …

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What is a divestment?

Companies can use excess cash to acquire new companies but they can sell a subsidiary to obtain cash and add value back to the parent company. In this article we discuss about what you need to know about divestment. What is a divestment? A divestment occurs when a company sells off a subsidiary or some of its assets. It is essentially the opposite of an acquisition. The company is looking to optimise the value of the parent company which may …

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What is a stock bubble?

The recent news of GameStop shares rallying to blue sky territory has some investors concluding that the stock was in a bubble. GameStop has recently been sold off heavily and the shares are now valued US$90 which is a significant drop from its all-time high of US$483. Although GameStop shares spiked on unusual circumstances, there are other stocks in the market where some feel that they are sitting in bubble territory. This leads to the question, what is a stock …

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Is inflation good or bad?

Inflation is often portrayed as a problem for the economy and the share market. With interest rates at record lows, and central banks printing money like never before, investors are concerned about inflation heading higher. However, a low level of inflation is healthy for the economy. In this article we discuss what the causes of inflation are and how it is good or bad for the economy. What does inflation mean? The simple definition of inflation is the general rising …

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