Every broker, investor, analyst and outside observer will have a different view of stock markets, sectors and individual companies. In order to accommodate every buyer there must be a seller, and vice versa. Whether you overcomplicate or oversimplify the way in which stock markets operate, one thing is clear, they are driven on information which then creates supply and demand. So how does this work?
When you consider that the Bank of England has a long term 2% target rate for inflation, you might assume this is a minor threat to your long-term investment returns. Unfortunately, over the last 12 months, we have seen a gradual strengthening of inflation which hit 7% in March 2022. The Bank of England believes inflation will peak at 8% towards the end of 2022. However, a double-digit spike is not out of the question. This has the potential to decimate real investment returns as opposed to nominal investment returns.
Whether looking at individual stocks or a particular index, when sentiment turns negative this can lead to a drip feed that drags prices downwards. If we look at individual stocks, day traders and short-term traders specifically look for oversold positions. This allows them to take advantage of market volatility and hopefully buy at the bottom.
Born on 30 October 1930, Warren Buffett has achieved legendary status in the world of investment. He is estimated to be worth more than $100 billion and is affectionately known as the “Oracle of Omaha”. Famous for his basic investment approach, based on value for money, he has uttered many extremely helpful quotes.
While the prospects for individual quoted companies can vary enormously, there are four very important factors which dictate stock market trends. Taking a top-down approach to your investment means taking into account general market trends, then drilling into individual sector and company trends. In volatile times, individual sectors and individual shares may find it difficult to “go against the wider market trend” which may impact your investment decisions.
Cast your mind back to the 1980s, a time when stock markets were flying high, economies were booming, and decadence was in full bloom. Referred by many as the “greed decade”, this was a turning point for stock market investment. Private investors, who had long since depended on the advice of experts, began to make their own investment decisions. Then, step forward the movie Wall Street!
As a broker offering prime services, we have many clients wishing to deal directly with the market. This type of trade execution service is known as Direct Market Access (DMA) and is available to eligible established clients. So what are the pros and cons of electronic trading?
Retail trading is not something you can do half-heartedly. You need to know why you’re doing it and how you’re going to proceed. This will dictate how you behave in the market and help you to see beyond any temporary setbacks. Research is vital. The more information you have at your fingertips, the better your strategic decision making will be when it comes to trade execution.