Growing your wealth today does not have to be as difficult as some of you may think. Even though the road to great wealth may take time and a certain amount of expertise, there are some basics that you need to know to be successful with your efforts. This is especially the case for those of you who are expecting to become a savvy investor in the stock market.
If this is the case, you need to learn as much as you can about the stock market prices and how they are affected on a minute to minute, week to week, and month to month basis. With this information in mind, here are three world events that can affect the prices of the stock and its overall fluctuations.
1. Impact of Exchange Rates
In an increasingly outreach in a global economy, doing business in other countries is now the norm and no longer an exception. Many American companies are conducting business abroad and the impact of these activities has a highly pronounced financial effect on the stock market. One of the most common involves foreign currency rates and the direct impact that they have on stock value in the market and the ex dividend date, too.
For instance, these exchange rates will determine if the stock that you invest in will do well or perform very poorly. In some cases, this may mean your stock may go down or up as the exchange rates fluctuate. These fluctuations may affect your stocks for the good if the demand for a company’s products and services are high. Or, on the other hand, if the demand for a particular company’s products and services begin to fall, the exchange rates in another country may begin to fall as well. Therefore, if you really want to do minimize your risks, it is very important that you keep up-to-date with a company’s activities overseas as well as on domestic soil.
2. Financial Reports and Hype Around New Products and Services Releases
Another huge event that can affect the ups and downs of the stock market around the globe involves the financial reports and hype that surrounds new products and services.
Normally, when new products and services are being announced to the public and investors as a whole, the anticipation around the financial impact (good and bad) can easily affect the stock market prices. Also, if the financial reports for a particular quarter of the year look like great gains have been made, the price of a company’s stock can soar. For instance, if a company like FedEx has had a good quarter in the U.S. and abroad, the financial reports that they make can and will affect the stock prices and their worth at that specific timeframe.
3. Wars and Civil Unrest
The stock prices of a company can also be adversely affected by a wide range of world events, including natural disasters, civil unrest, wars, and acts of terrorism. Based on the situation or circumstances involved, the wide range of implications can have a huge influence on the stock market prices in the United States and across the globe. For instance, if you refer back to the September 11th acts of terrorism, there was a huge impact on the market prices throughout the United States. With the anxiety and uncertainty that came as a result of these tragedies, there was a monumental adverse impact on the stock market during this time.
In addition to events like 9/11, wars and the threats of wars are events that can have a major impact on the prices of a company’s stock. In fact, the prices of certain stocks may go down during these times or they may actually go up. For instance, if a company is producing goods specifically to support that war’s efforts, the stock prices of these stocks may rise dramatically instead of going down.
Understanding the nature and the instability of stock prices is often complex for even the savviest of stock investors. It is very important that investors become familiar with how world events can greatly affect an individual investor’s ability to grow and maintain wealth. This is also one of the primary reasons why it is very important that every investor knows exactly what drives the rise and fall of these prices.
