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hrvestor | Stock Market Factors

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Stock Market Factors

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The stock market forecast for 2018 might be best summed up as a roller coaster ride. The way the market fluctuates can, understandably, be unnerving for investors, so making stock predictions can seem more like luck than science.

As the market changes, investors sometimes become reactive towards buying and selling with the masses. But it is better to use your head than to make any rash decisions based on fear or following the herd. When you consider the stock market today, analysis rather than emotion should lead your choices.

To make the right buying and selling choices, you need to know more about the forces that shape the investing world and have traditionally determined stock market historical returns.

Supply and Demand

When it comes to influential investment market forces, ‘supply and demand’ is probably the most familiar concept of all. Its ongoing importance makes it worth revisiting.

In the stock market, any movement can be understood regarding the gap between what providers are supplying and what consumers want. There is truth to the idea that stocks go up when ‘there are more buyers than sellers’ and vice-versa.

In our bid-ask stock system, an abundance of buyers means they will ‘bid up’ prices to lure sellers into disposing of their stock. Or if there is a surplus of sellers, they will ask for lower prices to move their stocks.

Shaken Confidence in Stability of Market

Investor confidence is ever-changing and can be shaped by many market indicators. If investors feel that these indicators are strong, people are more likely to buy, believing the value of their investments will go up. But if the signs show that the stocks will perform poorly, then selling will become the driving force.

Things that can shake investor confidence include:

  • Natural disasters
  • Wars and other conflicts
  • Changes in government money policy
  • Worries about inflation or deflation
  • Effects of new technology
  • Data about corporate or government performance

Sweeping Economic Trends

Yes, specific business trends that can affect an individual company are important to know, or as they affect stocks by sector. But you also need to consider broader trends that can change the economy as a whole.

Regardless of how well managed a company is, it's challenging to make money if the country’s economy goes into recession. As growth rates decrease and money losses mount, the demand for stocks dwindles.

Changing Interest Rates

Whether you are investing for your kids’ education, buying bonds for your retirement, or playing the market to increase your personal wealth, the value of your stock purchases can be affected by rising or falling interest rates.

Rising interest rates, for example, can make specific investments a safer alternative to stocks, such as U.S. Treasuries. Or a change in interest rates may affect how much money investors, businesses, banks, and governments are willing to borrow, which in turn has an impact on how much money there is in the economy for investment.

Other Market Factors

A stock’s valuation can be changed by news about a company and its performance – how it doesn’t meet revenue projections, how it’s involved in a scandal, how there’s a sudden change in leadership, and the list goes on.

Or changes in an industry's performance can be an influential factor. If the steel industry, for example, is hit by sudden tariffs on their exports, then the demand for stocks in this sector could fall.

Research shows that investor sentiment can also spark stock-market crises, as a ‘herd mentality’ that can lead to unfortunate overreactions to market conditions.

Act Don’t React

You can navigate changing market conditions with greater clarity by acting in your own interest only if you have the right tools and information at your disposal.

With Hrvestor, you have access to an intuitive stock decision engine that automates analysis, provides strategic trade guidance and identifies investment opportunities. We look at fundamentals to decide what to buy and momentum and other trade indicators to decide when to buy/sell. We are more rational about identifying the right stocks to buy and the timing to buy or sell. It is all about managing risk whether macroeconomic or business specific.

If time is money, then we can save you time so you can make more money. As a one-stop hub of information and tools for identifying value investment opportunities, we save you from the often slow-moving and frustrating option of referring to many different sources, including magazines, newspaper, online and TV, while trying to evaluate what is useful and trustworthy and what is not.