How stock market works?

Most new investors have thought of stock market to be added in their portfolios. But many may have felt that it’s like a legalized gambling. We see it as this : Men and women place their bets by choosing a random stock. This may be based on their gut instinct and water cooler chatter. When the price of the stock you chose rises, you win! If it drops, you lose! More of driven by luck, isn’t it?  This has become the reason for many people who got rich in an instant and lost their retirement savings the next day.

Unfortunately, this is how new investors see the stock market—a short investment. But then, it takes time and the will to learn about stocks to understand more the truest nature of stock market investment. If you carry on a positive attitude, you’ll get better and smarter in managing your money.

So, let’s start by defining what a share is. It is literally a share in the ownership of the company. When you buy a portion of the stock, you are entitled to a small fraction of the assets and earnings of that company. Everything the company owns may it be buildings, equipment, or trademarks are part of the assets. The earnings comprises of the money brought from selling products and services.

The reason most companies share their assets and earnings with the general public is of course, they need money. Companies rely on two ways in raising money. The first one is through borrowing or debt financing. The second one is selling stock or equity financing.

The latter is the best option. Through this, the company gets money with lesser strings attached. There would no interest to pay and no requirement to pay the money back. But this is just basic information, more can be learned from experts. 

Stock Market in the Philippines: Take a Look

When we say Philippines perhaps the first thing that comes in our mind is a third world country. We immediately refer to the country’s economy when we are talking about stock market. Aside from this, when we say stock market we have in mind the amount of money that goes in and out from the companies operating within the country.

Some jargons about stock market that are not common to everyone are initial public offering (IPO), equities, dividends, PE Ratio, corporate earnings, fundamental and technical analysis, buyer and seller.

In addition, stock market refers to the investments entered into a certain country. As for this matter, we go through the Philippines. Buying and selling of big corporation in the Pearl of the Orient are the largest potentials that could increase the value of Philippine currency.

Like any other circumstances in the world of stock market, when it maintains high level it indicates that Filipinos are able to purchase goods with their Philippine money.

It’s safe to say that the highest peak of Philippine Stock Market was during 2009 when a number of corporations profited at least 30 percent. Meralco topped them all with 321 percent profit as its share reached Php198.00 per share from Php47.00 on the previous year.

GMA Network Incorporated, a television network, followed the electric company. It arrived with 64 percent profit as its shares increased to Php8.40 each from Php5.10 in 2008. Metrobank came next with 60.78 percent increase earning Php41.00 per share from Php25.50 a year earlier.

SM Prime Holdings stopped at fourth place where it gained 49 percent profit receiving Php10.75 per share from Php7.20 in 2008. Jollibee Foods Corporation landed on the fifth place with 38.67 percent profit gain with increased Php52.00 per share from Php37.50 a year earlier.

European Ministers to rescue Greece, investors of TNT want higher offer

For several months, Greece has been in the midst of debt struggle as euro zone’s economy has not been really pleasant. On Monday, finance ministers of euro zone were perched to taking the country back from the dangerous margin through approving a second huge bailout. However, the approval has strict limitations and exchange for stern measures on austerity.

Evangelos Venizelos, Finance Minister of Greece, is firmly confident that his government was able to meet the entire conditions for the release of second bailout.

In addition, Francois Baroin, Finance Minister of France, stated during a meeting held in Brussels that the whole conditions were placed for the bailout worth $172 billion or €130 billion. The New York Times noted the package as a view to determine private investors who will be taking sheer losses towards their holdings in the midst of debt crisis in Greece.

Venizoles stated, “The people of Greece deliver the message that necessary sacrifices have been made and will be made in order for our country to reclaim it equal position in the family of Europe.

Meanwhile, investors of TNT Express are up for a higher bid as the company’s shares went up to 50 percent on Monday.

On Friday, the delivery express confirmed its rejection of UPS’ offer which is €9 a share. With the biggest delivery company’s offer, TNT is valued at €4.9 billion or $6.45 billion. However, a source who wished to remain unidentified said that both companies are still under negotiations.

On Monday, shares of TNT increased from €6.3 on Friday to €9.8 at early hours of trading.

The stock market fears to hold 9-months high

Ever since recession has started, the stock market has been put in an inconsistent state. Lately, companies and analysts have been facing difficult times with the stock market. Sadly, if the earnings of US companies will continue to be unimpressive for the rest of the profit season, Wall Street will be facing a tough time defending the market at a nine-months high.

Strategists still feel the need to push higher in facing this resistance. This is despite the US economy starting to recover which slowly displays stronger momentum. The deal with Greece is also under negotiations.

The S&P (Standard & Poor) Index has already increased by 8% which exceeded the forecast of analysts. However, since the earning season has begun, there has been no reported good news on the stock market.

According to the head of equity research, Robbert Van Batenburg, the earnings have come in a more disappointing state. In fact, he’s not expecting any bright lights for the market for this week.

The Index which started in May 2011 and ended on the 17^th of February had 1,361 points. Reuters forecast expected it will end with 1, 340 points.

S&P’s earnings have been beating the estimates of Wall Street. Sixty-four percent of the analysts’ expectation has been exceeded by companies. The last week of February is seen as the last time of displaying earnings. We will definitely expect all eyes are on Europe and US economy for its new-home sales to be seen this week.