INVESTING PSYCHOLOGY - KEY ELEMENT IN THE EVOLUTION OF SHARE PRICE OF THE STOCK EXCHANGE LISTED ENTITIES

INVESTING PSYCHOLOGY - KEY ELEMENT IN THE EVOLUTION OF SHARE PRICE OF THE STOCK EXCHANGE LISTED ENTITIES

Susu, Stefanita;
ecoforum 2017 Vol. 6 pp. -
189
susu2017investingecoforum

Abstract

The information contained in this article is intended to clarify the evolution of the stock price of listed companies under the influence of their own strategies, on the one hand, and under the impetus of the actions of "panic buying" and "panic selling" specific to group mentality, on the other hand. The price of shares on the stock exchange is getting formed depending on supply and demand whereas the price of a transaction is made wherever the demand meets the offer. The higher the demand, the higher the price is, namely those who want to buy shares are more than those who want to sell them, and inversely if the supply of a share is higher than the demand, namely those who want to sell are more than those who want to buy, then the price will decline. In addition to supply and demand, the share price is also influenced by other factors such as: company's internal events, economic performance and results, events related to the industry wherein the issuer carries out his activity or news related to competitors, dividends granted, increment or reduction of the share capital, massive share purchases or sales by a single investor, as well as the economic, political and legislative, national or international background. The price of shares can be influenced by the general market sentiment and investors' psychology. This is difficult to explain from an economic point of view, but that does not mean that it does not impress on the price of shares, so it is important for potential investors to be receptive to the market signals and get connected to the economic reality.

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