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owesem75
02-16-2014, 10:31 AM
I am opening this thread to encourage those who are already in the stock market or those who are thinking to invest in the stock market to discuss about reasons why and how global incidents are affecting the stock market. For example, if we find on the news that the Xyz country posted an x% growth, or the unemployment rate in the US has increased by x%, etc - why and how does it affect the stock market?

This is something that most newbie finds difficult to understand and that causes them to panic and withdraw. So if you are an experienced stock market investor or traders, please share your thoughts about it.

delusional
02-18-2014, 10:54 AM
There is a real correlation between events that occur in daily life and the stock market. The effect can not really be predicted because it can either be good or bad for the investors. It can also not be predicted in the sense that you can know whenever an oil rig will explode or a tanker would spill it's oil.

pahagwl
02-18-2014, 11:24 AM
In my opinion, the stock market is greatly influenced by news on a daily basis. Speaking on a very basic level, I can say that stock market is mainly affected by two kinds of news, political and economical news. Political news relates to the policy related news of the government which might affect the stock market in the sense that they may promote trade and investment or might discourage it. And the economic related news is the news about the economy of nation which directly affects the stock market because it is the indicator of future movements of the stock market. For instance, if the economy is performing well, then the stock market will react positively as people will believe that they can earn more money by investing, and if the economy is not performing well, the reverse will happen.

sdsnook
02-18-2014, 11:36 AM
It is interesting how media does affect almost anything and everything we do. I guess it wouldn't be a big surprise for it to affect the stock market. Everything kinda just goes hand in hand, which makes getting involved a cumbersome road....

crimsonghost747
02-18-2014, 01:22 PM
Media definitely has a huge effect. Basically the stock market is alway trying to predict how well a company will be doing in the future, so obviously all the news relating to that very company or to the economy in general will have some effect.

DomDom
02-18-2014, 05:52 PM
I am opening this thread to encourage those who are already in the stock market or those who are thinking to invest in the stock market to discuss about reasons why and how global incidents are affecting the stock market. For example, if we find on the news that the Xyz country posted an x% growth, or the unemployment rate in the US has increased by x%, etc - why and how does it affect the stock market?

This is something that most newbie finds difficult to understand and that causes them to panic and withdraw. So if you are an experienced stock market investor or traders, please share your thoughts about it.

I am not very experienced myself (still learning...) but I can say a few things on why economic news has impact on the worth of a currency. Basically (among other things...) unemployment and the current interest rate in the country impacts the underlyign worth of the currency compared to those of other countries. The matter is a bit complex so I would suggest reading up babypips.com - the school and check out the fundamentals on why and how!

crimsonghost747
02-19-2014, 03:53 AM
I am not very experienced myself (still learning...) but I can say a few things on why economic news has impact on the worth of a currency. Basically (among other things...) unemployment and the current interest rate in the country impacts the underlyign worth of the currency compared to those of other countries. The matter is a bit complex so I would suggest reading up babypips.com - the school and check out the fundamentals on why and how!

Ahh... but everyone is always learning! It never ends!

Anyway, thought I'd add a bit more about unemployment.
It's not complicated. What do people gain from working? Money. What do they do with that money? They buy things. What happens if they don't have money to buy things? Companies selling those things make less profit. And this leads to? The value of their shares decreasing.

Obviously it works the same the other way around and some industries are affected a lot more than others. As I said the stock market is always trying to predict the future, so when people here that there are a lot of new unemployed people in the country where store X sells high end clothing, investors will think that there could be hard times in the future for store X.

alec
02-19-2014, 07:36 AM
From my limited understanding it's all about supply and demand. If the news regarding a company are good the demand (people buying) is higher so the price rises and if the news are bad, the supply (people selling) grows thus the price drops (since more supply is available than demand). And from here we can see why news and always knowing the state of the companies you invest in is very important. It's also the reason why in developing counties or war thorn territories investors are shy to move, there would be little demand due to instability.

fredkawig
02-19-2014, 07:48 AM
I'm not an experienced trader but I think those offering stocks for Example Apple can either increase or decrease in value based on the assets, profits and other excess revenues of the company. For example Samsung loses profit and goes bankrupt, naturally the stock representation of their shares in the market would plummet down and people who invested much money there would be in a hurl.

Nerohs
02-20-2014, 09:10 PM
From my limited understanding it's all about supply and demand.

Yes, that is exactly what it is alec. Supply and demand drives the stocks up or down. It only makes sense that worldly events would cause a shift in the stock market. For example, when a natural disaster occurs. Things that change could be gas stocks, or maybe certain tech stocks, etc. because people are buying in order to supply the survivors.

WeDontSleep
02-21-2014, 03:03 AM
Global incidents affect the stock market a lot. Let me show you an example: last year there was a huge fire in the countries biggest sugar factory (which produces almost 70% of the region's sugar), immediately after this showed up in the news the sugar prices went up. If you want to be a successful investor you should always follow the news. Being updated with what's going on in the world enables you to make good investments.

Taru
02-22-2014, 12:59 AM
Industry shifts tend to affect businesses who are a part of said industry either negatively or positively, so it's important to keep up to date with current events to know whether or not a stock is still worth keeping in any particular day when there is a major event. Furthermore, mass panic often affects the price and profitability of a company as well, since if the business gets a bad rap, then the investors tend to pull out their investments and causes a snowball effect because the more distrust a company gains, the more investors pull out and therefore cheapen the stock.

CG7262
02-22-2014, 01:05 AM
Ive always wondered about the stock market. Since you guys have some experience have a question: who decides what happens to the price of stock? I get that news and events concerning the company in question affect stock prices but who decides how much and in what direction is it affected? Does everyone just agree on the price fluctuations or is there a group that analyzes the company and comes up with the numbers?

DomDom
02-22-2014, 06:29 PM
Ive always wondered about the stock market. Since you guys have some experience have a question: who decides what happens to the price of stock? I get that news and events concerning the company in question affect stock prices but who decides how much and in what direction is it affected? Does everyone just agree on the price fluctuations or is there a group that analyzes the company and comes up with the numbers?

Generally the price of a stock is a reflection of what somebody is willing to pay for it. The main things are earnings, growth,patents,assets. Another thing that is also very important is the popularity!

crimsonghost747
02-23-2014, 11:51 AM
Ive always wondered about the stock market. Since you guys have some experience have a question: who decides what happens to the price of stock? I get that news and events concerning the company in question affect stock prices but who decides how much and in what direction is it affected? Does everyone just agree on the price fluctuations or is there a group that analyzes the company and comes up with the numbers?

Supply and demand.
The stock price you see is the price of the latest trade, where somone bought X amount of shares from someone else with the indicated price paid for each share.

Lostvalleyguy
02-25-2014, 01:29 AM
While I am still very low on the learning curve, I believe that your question, and an understanding of the answer is a crucial component in making wise choices in the market. To that end, I have done a little research on this topic and this is how I see it.
Many of the companies listed on the various exchanges have a great deal of international exposure whether we see it or not. If a company imports goods or materials from a foreign country or farms out labour, the cost of doing business - and hence profit - can be greatly affected. As a Canadian I see how the ratio of the USD to the CAD impacts tourism in one direction, and exports in the other. If unemployment is rising is a country, fewer people will have the expendable income to buy my products or my farmed out labour costs may rise.
As far as broadcasting (or sensationalizing) events on the news, this seems to impact the emotional investors more than the more than the shrewd experienced ones. The true impact on a stock price is probably only a small portion of the fluctuation you see as a result of an event. The rest of the fluctuation is people hopping on the bandwagon a little late or jumping out of the lifeboat a little early.

jubvman
02-25-2014, 07:02 AM
Generally the price of a stock is a reflection of what somebody is willing to pay for it. The main things are earnings, growth,patents,assets. Another thing that is also very important is the popularity!

Agree with this. It's just a reflection of how much people are willing to pay for it. For example that thing that happened with Greece a while back, the Euro declined..

crimsonghost747
02-25-2014, 01:28 PM
As far as broadcasting (or sensationalizing) events on the news, this seems to impact the emotional investors more than the more than the shrewd experienced ones. The true impact on a stock price is probably only a small portion of the fluctuation you see as a result of an event. The rest of the fluctuation is people hopping on the bandwagon a little late or jumping out of the lifeboat a little early.

Definitely. Day traders LOVE these news since often there is a big move because people panic. It's ridiculous but if you see it happening it's easy to profit and make some quick money.

DomDom
02-25-2014, 04:49 PM
Definitely. Day traders LOVE these news since often there is a big move because people panic. It's ridiculous but if you see it happening it's easy to profit and make some quick money.

I guess thats why they say psychology is 95% and skill is 5%.

crimsonghost747
02-25-2014, 05:23 PM
I guess thats why they say psychology is 95% and skill is 5%.

Yes, very possible. I don't know how much psychology comes into play during a normal day, but it certainly has a big effect on days when companies release financial reports or other news relating to the company are released.

DomDom
02-26-2014, 04:12 PM
Yes, very possible. I don't know how much psychology comes into play during a normal day, but it certainly has a big effect on days when companies release financial reports or other news relating to the company are released.

I read an interview somewhere abotu a day trader. He said the best months I have are around 100000$ plus and the worst are 75-80000$ minus. Imagine the psychology if you can lose 80k and be alright!

ozelegend
06-24-2014, 04:30 AM
In the very short term space, you have computer models which scan new feeds for key news announcements, eg US GDP 1%, if it is greater than expectations they set their model to buy for example, Also, arbitrage algorithms which look mis pricing between assets. Eg. BHP in Australia and UK exchanges.

Also, you hear the phrase, 'buy the rumour, sell the fact,' when the market doesn't react as expected. Much of this has to do with how the market is already positioned come the news, or what people expectations for the news were. If the the Non-farm payroll figures are +500k, great, but not if the market was expecting +600k. If the much of the market wasa already long and the news came out bullish, the market may fall as there aren't enough buyers to sustain the move further.

So, yes, markets go up for Supply and Demand but other factors do come into play.