How Stocks are Valued

You might be wondering how stocks get their prices, why do the stock prices go higher, lower or stay at a particular price?

There are a lot of factors that impact the price of a company’s stock.  Aside from factors of the company itself, external factors like a country’s economy also influence the price of a stock.

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One of the key external factors which affect stock prices is the country’s GDP or gross domestic product.  The GDP measures the value of all goods and services produced by the country, in its own territory.  The GDP is a fundamental indicator of a country’s economic health.  The GDP is usually represented by a percentage, the higher the GDP the better the impact on the price of stocks.

A company’s stock price is also affected by supply and demand.  If there are more investors buying a particular stock, tendency is, the stock price will go up.  Conversely, if there are less investors buying the stock, the price of the stock usually goes down.

There are a lot more internal and external factors which influence a stock’s price, these are just some of the most influential factors which move stock prices.

Hopefully, by learning these, you can already begin investing in the stock market and start your journey to financial freedom.

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