Understanding general and simple stock is "marketable securities that can be bought or sold by individuals or institutions in markets where these letters be traded."Shares (stock) is one of the instruments of the most popular financial markets. Issuing shares is one option the company when the company decided to funding.On the other hand, the shares represent an investment instrument that has been chosen to investors because shares can provide an attractive rate of return.Shares can also be defined as a sign of a capital investment a person or party (entity) within a corporation or limited liability company. To include such capital, then such party has a claim on corporate earnings, claims the company asset, and is entitled to attend the General Meeting of Shareholders (GMS).2. Stock MarketStock markets are places where the company can offer its shares for sale. They do this through initial public offerings (IPOs).After the initial offering, thousands or millions of investors who have purchased these shares can be returned to the stock market to sell their shares to other investors, which began trading in shares. Stock market is just sort of shelter for this trade.3. Determining Share PriceEach company's share price is not the same, prices will vary. What causes the difference? All that is determined by the opinions of the company.For example there is a company that produces profit amounted to 10 million annually. Roughly what price that may be suitable to sell the company? Say offered a price of 100 million. Is there going to want to buy it?Potential buyers will assess the situation with the question "How much profit will I earn if I invest it elsewhere?". If there is another vehicle that can generate greater then he will not buy the company. Maybe the company should reduce its price.Another factor to consider is the potential for profit growth. The company was probably only able to produce 10 million this year, but next year opportunity to get 20 million. For the 10% level of profitability and growth potential, perhaps the company could be sold at 150 million.This is the reason a lot of shares which increased very rapidly even though now they no longer generate much profit.
The factors that cause stock price fluctuations can be divided into macro and micro factors.Macro factors are factors that affect the overall economy. High interest rates, inflation, national productivity levels, political and others can have an important impact on the potential benefits to the company, inevitably affecting its stock price.Micro factors are factors that impact directly on the company itself. Change management, pricing and availability of raw materials, labor productivity and others which may affect the profit performance of individual companies.What causes price volatility or the volatility is because often there is a difference of opinion over where the profitability of the company. At a time when many people think that a company's profitability declines, it will be selling more shares so the price will also drop. Of course, the opposite may also occur.5. How About Dividends in Shares?In addition to price increases or increase of capital, dividends are one way to be able to generate profits. Many companies also pay an annual dividend. This is a cash payment that reflects part of company profits. But of course the sole discretion of the company is to provide a dividend or not. They are not obliged to do so. But in general, they are still going to give a portion of profits as a form of appreciation to its investors.Stock TypeThere are two kinds of shares plural marketed, namely ordinary shares (common stock) and preferred stock (preferred stock).a. Ordinary shares (common stock).This type of shareholders in companies representing ownership of capital invested. The advantages of this form of shareholder dividends derived from corporate profits. Holders of these shares would not have guaranteed the return of the company. When companies make profit, then the shareholders will get dividends for allocation set by the AGM. However, a time when the company liquidated or bankrupt, the stockholders of this type is the ultimate end of getting rights to the company's assets after all liabilities are settled and the company's preferred shareholders are paid at par value of their securities.In addition to gains in the form of dividends, the holders of ordinary shares could also benefit from the difference in value of purchases by selling their shares. Say, if you buy a stock at price of USD $ 500 and sell when the price reaches USD 600, then you will earn a profit of USD $ 100 multiplied by the number of shares you are selling. The advantage of this type is called capital gains. Conversely, if stock prices decline, then you suffered a loss which is called capital loss.Other characteristics of the common stock, other than a claim for property companies is low compared with most other enterprise components, as well as the absence of the maturity date or maturity date.b. Preferred stock (preferred stock).Share this type have a hybrid nature which means that in addition to having the characteristics as a stock, also has properties like bond. If you own shares of this type, you will receive regular payments for the price of shares multiplied by the rays of the interest every year (the nature of the bonds). If you type actual cumulative preferred stock, so if you have not received a dividend payment last year will be accumulated with the dividend for the year. Other types of non-actual cumulative, which means you will not receive the dividend is not paid prior period, while the various participating will receive a proportionate increase in dividends following the increasing value of the common stock dividend. Preferred stock owners have the right to vote to elect directors of the company, only if dividends are not paid for a year or more.The nature of this preference is also reflected in treatment received when the company liquidated. The owners of these shares will receive a payment equivalent to the price before the dividend on shares pari ordinary shareholders are paid. Because many properties of this type that resembles the stock of bonds, then classify them into several parties in fixed income.Benefits and Risks of Shares5. ProfitBasically, there are two advantages obtained by the investor to buy or own shares:· DividendDividends represent a distribution of profits by the company and the profits generated from the company. Dividends are given after approval from shareholders at the AGM. If an investor wants to get the dividend, so investors must hold the shares in a relatively long period of time ie until the ownership of these shares is in the period in which they are recognized as shareholders who are entitled to a dividend.Company's dividend could be a cash dividend - meaning to each shareholder is given the form of cash dividends in the amount of a certain amount for each share - or they can be in the form of stock dividends, which means given to each shareholder dividends in the amount of stock so that the number of shares owned by an investor will increase with the existence of the stock dividend.· Capital GainCapital gain is the difference between purchase price and selling price. Capital gains made by the stock trading activity in the secondary market. Investors buy stocks for example the ABC at a price per share of Rp 3,000 then sold at a price of Rp 3,500 per share, which means that investors get capital gains amounting to USD 500 for each share sold.6. Share RisksAs an investment instrument, the shares are subject to risks, among others:· Capital LossIs the opposite of Capital Gains, which is a condition in which investors sell shares is lower than the purchase price. For instance shares. Buy XYZ at a price of USD 2000, - per share, then the share price continued to decline until reaching Rp 1400, - per share. Fearing that the share price will continue to drop, investors sell at a price of USD 1400, - is thus a loss of Rp 600, - per share.· Liquidation RiskCompanies whose shares are owned, declared bankrupt by the Court, or the company is dissolved. In this case the claim rights of shareholders have the last priority after all the liabilities of the company may be redeemed (from the sale of business assets). If there is still remaining from the sale of company assets, the remainder is divided proportionately to all shareholders. But if there is no remaining business assets, then shareholders will not receive the results of such liquidation. This condition is a risk that the heaviest of the shareholders. For that a shareholder is required to continuously follow the development of the company.Stock Analysis TechniquesIn conducting an investment, an investor is often confronted with fundamental questions, such as whether stock prices reflect the market value of the company's real? If not, what is the actual value of these shares? Intrinsic value(intrinsic value) represents the actual value of a stock, and is the standard for considering whether the stock is considered too low (undervalued), fair (fairly priced), or considered too high (overvalued). While the stock market price(current market price) is formed at a market price of the share purchase.Investors need to analyze stocks with the aim to assess the value of company stock intrinsiksuatu, then compared with the current stock price to determine the fairness level of stock prices. For that, there are two approaches used in analyzing a company's shares are as follows:1. Technical AnalysisTechnical analysis is an attempt to predict stock prices by examining changes in stock prices earlier period, and attempts to determine when investors should buy, sell or retain their shares using technical indicators or using graph analysis.Technical indicator used is the moving average, trading volume, and short-interest ratio. While the graph is expected to identify various patterns such askey reserval, head and Shoulders, and sebagainya.Analisis uses data from the stock market, such as price and volume of sales transactions shares to determine share value.2. Fundamental AnalysisFundamental analysis is that each stock has an intrinsic value. This analysis attempts to calculate the intrinsic value of a stock by using the fundamental data of the Financial Statements of the Company, such as earnings, dividends, sales, capital structure, risk and so forth. This analysis would compare the intrinsic value of its market price to determine whether the market share price already reflects its intrinsic value or not.There are two approaches used in calculating the intrinsic value of a stock, iea. Present Value Approachb. Price Earning Ratio approach.
- What Causes Stock Price Volatility?