Share Prices Explained

By Author: Gareth Hoyle
Total Articles: 675
Comment this article

A share is a little portion of a company that can be bought on a stock exchange. They are usually sold in bundles, and when you buy a share you become a shareholder with a stake in the performance of the company the share is in. Companies sell these shares to raise capital that can be used for all sorts of projects, including expansion, new projects, product development or promotion. Shares are also often referred to as stocks, securities and equities. A stock market can also be called a share market or a stock exchange.

Share Prices

Understanding share prices is one of key element in making money on the stock market and there are all sorts of different investments available to suit the needs and desires of investors with different strategies and objectives.

Company Performance

Fundamentally, share prices are determined by the performance of a company. Market conditions as well as supply and demand will influence a business’s performance, so choosing shares is about selecting ones which will perform well over the long term. Look for companies with robust balance sheets and good business models, ...
... and ones which adapt to current economic conditions.

Buy Low, Sell High

The unarguable first principle of making money on shares is to buy low and sell high; i.e. buy the shares when they are their cheapest, and sell them on when at the maximum possible value. It’s when people attempt to make big returns on short term investments that sometimes they can become unstuck. Some shares are riskier than others, so it’s important to come up with a realistic investment plan and strategy.

It is possible to see big returns on short-term investment, but these investments tend to carry a much larger risk.

Share trading has never been easier thanks to online share dealing websites. Investors benefit from having increased access to financial information, and the ability to make informed decisions and implement them almost instantly. There is also a wealth of educational material available online covering shares and share prices. The more time you invest in learning about the markets and your options the more informed your decisions will be.

To reduce the risk of investments, many investors choose to diversify their investment portfolio. Investing in different sectors and industries may help to spread the risk; however it can cost a lot of money to create a truly diverse investment portfolio.

Graham Spooner, Investment Adviser at The Share Centre, writes on a number of subjects including online share prices and share trading.