Stock Price Volatility
Stock prices are characterized by volatility. When significant changes occur, investors tend to panic.
Different factors influence the movement in stock prices. For example, when the events in Asia of 1998 occurred, the prices of stocks got really dynamic, which was reflected in a negative way even on investors that held high expertise. During the following months the S&P 500 experienced one of its highest drops of 20% observed in recent times. This fall was later followed by a huge increase of 30%, which in itself represented a record climb.
The media concentrated its attention to the Dow and spoke of stocks as if they were deprived of any volatility. What happened actually was that different companies experienced the events in different ways since they were affected in varying degrees.
Going back to the 1998 crisis, investors generally bought stocks of companies that have proven their consistency and were part of the Dow. They preferred them because they represented a higher degree of stability. On the other hand, negatively influenced were companies of a smaller size.
During these times, the technology industry enjoyed positive attitude since the Internet has gained more popularity. However, oil-equipment companies sustained losses since they were greatly affected by the Asian crisis.
So, having in mind these factors, the prices of stocks are very volatile. They tend to be influenced by the news going around. Investors try to determine the influence of different news on the price of stocks. Additionally, the stock market is susceptible to the influence of different events both of economic and political character.
Zecco offers free stock trades, no account minimum, real time quotes, trading community, and is also insured and protected against loss by SIPC. Opening a Zecco account
| Rate this article : Low | High |
- Variable Annuity Contracts Explained
- Investors Beware of Government Impersonators
- Options on Securing Your Securities
- Hedge Funds 101: Introduction to Hedge Fund Investing
- Investor Alert: How to Avoid Investment Fraud
- What Happens When a Public Company Goes Private
- Investment Planning 101 – Getting Started on Investing
- What Are Promissory Notes and How to Avoid Promissory Note Fraud
- Implications of Bankruptcy to Investors
- Types of Corporate Bankruptcy
- Asset Allocation – Choosing the Best Allocation Strategy
- Financial Analysts: Potential Sources of Bias
- What Investors Need to Know about Financial Analysts
- What Are Financial Analysts?
- Brokerage Account Opening: Things to Do and Remember
- Bond Funds Safety
- Bank Demutualization - Frauds to Watch Out For
- Understanding Mutual Companies
- Filing for Chapter 11 Bankruptcy
- Chapter 7 Bankruptcy
- Auditing Essentials
- Introduction to Microcap Stocks
- Lost or Stolen Stock Certificate?
- Understanding Trade Execution
- SEC Order-Handling Rules
- Understanding Margin Calls
- Day Trading Profit and Risks
- Stock Market Day Trading
- Short Selling Risk
- How to Read Stock Tables
- Risks of After-Hours Trading
- Understanding After-Hours Trading
- Government Bailout Plans
- The Credit Crisis (Credit Crunch)
- The Subprime Mortgage Crisis Explained
- Investment Opportunities in Times of Financial Crisis
- What Caused the Current Financial Crisis?
- Stock Market Risk Premium
- Why Do Companies Go Public
- Price to Sales Ratio (PSR) Explanation
- Price to Earnings (P/E) Ratio Basics
- Price to Earnings Growth Ratio (PEG) Explanation
- Understanding Inventory Turnover Ratio
- Understanding Return on Equity and Return on Assets
- Price/Book Value Advantages and Disadvantages
- Importance of Current Assets and Current Liabilities
- Technical Analysis Basics
- Fundamental Analysis Technique Basics
- Technology Stock Characteristics
- Foreign Stock Characteristics
- Small Cap Stocks Characteristics
- Large Cap Stock Characteristics
- Stock Valuation Failures
- Stock Price Volatility
- Introduction to Stocks
- Stock Market Investing Basics
- Effects of Inflation on Your Investment Portfolio
- Consumer Price Index Basics
- Option Basics and Types
- Small Cap Stocks Opportunities and Risks
- IPO Basics and Strategies
- Time, Risk and Investment Goals
- Stock Portfolio Balance Maintenance Techniques
- Strategies to Deal with a Down Market
- Stock Market Crash Prevention Measures
- Inverted Yield Curve Implications
- CPI Basics
- Earnings Season Basics
- Stock Market Movements
- The Importance of Portfolio Rebalance
- Asset Allocation Basics
- Foreign Stocks Basics
- Rising Interest Rates and their Effects
- Market Timing Hidden Traps
- Longevity Risk and Retirement Plans
- Value Investing Basics
- High Risk, High Return
- Stock Portfolio Diversification
- Regulatory Bodies of the Securities Industry
- Beta Ratio Basics
- Advance Decline Ratio Basics
- Stock Price Influences
- Stock Valuations - Key Interest Rates Relationship
- Operating Cash Flow Implications
- Dividend Yield Explanation
- Book Value Explanation
- Assessment of Risk Tolerance
- Trailing Stop Order Basics
- Investment Risk Tolerance Level
- Investment Risk Types and Advices
- Stop Loss Order Fundamentals
- Newspaper and Online Stock Quotes
- Setting Stock Prices
- Stock Order Types
- Company Market Capitalization
- NYSE and Market Specialists
- Market Makers Role and Responsibilities
- Minimize Your Stock Losses
- Stock Trading Basics and Order Types
- Types of Stock Market Losses
- Avoiding Stock Market Fraud and Scams
- Bid and Ask Prices
- Stock Share Types
- Stock Market Indexes and Fair Value Indications
- Stock Split Basics
- Stock Market Sectors Classification
- Federal Reserve Board (Fed) Functions and Importance
- Stock Market Cycles
- Stock Dividends Basics
- Stock Basics
- Stock Beta Value
- Stock Buyback Reasons
- Types of Brokerage Accounts
- Stock Broker Categories
- Certified Financial Planner Designations
- Financial Advisor Job Description
- Discount Stock Brokers vs Full Service Brokers
- Bond Default Risk
- US Treasury I Bonds Basics
- Convertible Bonds Basics
- Zero Coupon Bonds Basics
- Bond Definition and Concepts
- Stock Investing Basics
- Investment Goals Planning
- Classes of Assets - Asset Class Definition
- Mutual Funds vs Individual Stocks
- Stock Investing vs. Saving