The economic factors that govern the stock prices

The price of the stocks falls and rises because of many reasons. There is no concrete solution that could confirm the stock’s price. However, one thing can be done. One can determine it by looking into the statistics of the company and the economic factors. They take a great part in the fluctuation of the prices. If you could anticipate it with the factors you will too be a well-known investor like Alan Jiwan.

The inflation and the deflation

These two economic factors are an important part to determine the stock prices. The economic status of the country or the product can be detrimental to the health of stock prices. The two of these are:

  • Inflation

Inflation increases, the prices of the product or the commodity also increases to maintain the profits from the products. This makes the investor see potential in the stock and they invest their money. This, on the other hand, increases the stock prices.

  • Deflation

When the prices fall then the profits of the company also falls and the economic activity decreases. If the stock goes down then the investors tend to sell their stock and move to more secure investing option.

inflation and the deflation

Economic and political changes

The world economy can also have an effect on the company and stock prices. World phenomenon like the oil prices, trade war, terrorism can affect all around the world if the oils prices increases then the stock prices will also increase and vice versa. If the terrorism is on the rise then most of the country would suffer deflation.

Changes of economic policy

The economic policy of a country also hampers the functioning of the stock. Some policies are great for on sector of the industry while it may harm the other sectors. This usually happens when a new government comes into power and it decides to alter some changes in the existing policies and adds new policies.

Conclusion

If you are embraced with the daily economic news then you are sure to excel investing in the right companies. You can also seek advice from investors like Alan Jiwan.

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