The last few weeks have been a tumultuous time for share markets. We have seen large declines in share prices but how do you know if a share market is crashing or having a correction? Definition of Crash and Correction A stock market crash is a sudden drop in share prices caused by fear and panic. A crash occurs when the market falls more than 10% in one day. A market correction is normal for share markets and this occurs …
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 …
We have previously written on the effects of the housing market and the economy but in this article, we explore the affects of a stock market on the economy. Even if individuals do not have share portfolios, a crash in the stock market may still affect them. 1.Lower stock prices means less earnings for businesses Businesses will feel the impact of lowering stock market values. When individual‘s net wealth values decrease due to the lowering of value of the stock …
People unfamiliar with share investing often compare it to gambling at the casino or the track. At first glance, it can seem like the share market is like a casino where you place bets on a stock and hope that it does go up. However in this article we outline reasons why there is a distinct differences between the two. There is a higher probability of creating wealth by saving a little each month and putting it in the stock …
To determine whether a stock is cheap or expensive, investors generally use the price to earnings (P/E) ratio. Historical information can be used to compare how expensive a company is in comparison to how the share price has traded over time. Price per earnings can also be compared to other stocks in same industry. That way we can also determine whether individual stocks are expensive relative to their peers. What is the P/E ratio? The price per earnings formula is …