Performance, typically measured by fluctuation in a stock price, is indicative of an increase or decrease in the price and value of a stock.
For stock market investors, everything does not end with buying stocks and leaning backwards. Every investor needs to pay particular attention to the performance of the stocks that are in the portfolio or are included in the portfolio. Because the performance of the stocks determines the losses or gains of the investors.
Although it is not always easy to predict which direction the stocks will go, it is important to monitor the performance of the stocks and try to predict which direction they are going to get.
The performance of stocks varies depending on the sector, price and balance. In this publication, you can learn what a stock performance means, what factors affect the performance of a stock, and much more.
What is Stock Performance?
Stock performance is indicative of an increase or decrease in the price and value of a stock. Performance is typically measured by fluctuations in stock price.
When the price of a stock increases, it indicates that the stock is performing well. On the contrary, a decrease in a stock price shows poor performance.
What are the factors affecting stock performance?
Many factors affect the stock performance in the market. The most important factor affecting stock prices is the general health of the economy. In case of economic downturn, it is possible to see a price decrease in many stocks. For example, if economic indicators such as industrial production or retail sales show a significant decline compared to the previous month, the shares will typically depreciate.
The current situation in the stock market is another factor. During the bear market, investors avoid shares. This decrease in demand naturally lowers stock prices. During the bull market, investors make more aggressive purchases, pushing prices up. This increase in demand also raises stock prices.
Another and perhaps the most important stock performance factor is the health of the company. For example, the rumors of mergers between the two companies often raise the stock price, while the company’s low earnings in the last quarter may lead investors to sell the stock. This may lower prices. In this respect, the performance of a stock generally depends on the performance of the company.
Should short term performances of stocks be taken as reference?
It is not always right to expect the same performance from a stock. Therefore, referring to short-term performances may not always be the right approach. Because short-term fluctuations in a stock will not be an indicator of long-term value or potential.
For example, when TURKSTAT announces economic data for an increase in unemployment, a stock may perform poorly. However, this important news affecting the overall economy may not have a major impact on the long-term success of a particular company.
Although long-term investors pay much attention to the performance of a stock, they are less willing to sell stocks during periods of recession in the economy. Similarly, short-term investors are wary of economic and financial news, even more sensitive than long-term investors. Therefore, short-term investors are more likely to sell when the price of stocks increases due to positive news.
Is It Possible to Estimate Stock Performance?
The performance of a stock can erase millions of pounds from an investor’s portfolio in a matter of seconds, and trillions of pounds throughout the market can evaporate during troubled periods.
Even though every investor tries to estimate the performance of the stock, unforeseen events can distort even the best estimates.
Natural disasters, major advances in technology, balloons and terrorist attacks are just a few of the unexpected events that adversely affect share performance. It is generally not possible for both long-term and short-term investors to avoid the sudden effects of these unforeseen events on stock performance.