investors reflect future earnings expectations of a stock in its price immediately.As soon as any piece of news is released investors respond with either buying or selling the stock to reflect this new news in the pirce. In this article i will explain what makes a stock price go up and how you can take advantage of such information to make good profits.
What makes stock prices go up?
At any point of time the price of a stock reflects all the future earning expectations this stock can bring you. For example, if Western union use to distribute 1 dollar/year as dividends, then this fact is going to be priced already in Western Union's stock price. Now if the management announced that they will increase the dividends to 2 dollars next year then Western Union's price will move up to reflect this new change in the future earnings expectations. Even though investors haven't received any of these dividends yet the stock price will still go up because the price always reflects the future earnings of a stock.
There are lots of factors that can make a stock price go up, here are some of them:
Making the right choice from the beginning is what will make your stock deliver good news for you. Buying stocks that have strong competitive advantages ,creditable management and good value compared to their price are the key factors in making the right selection.
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