Investing word of the day: Rally

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I got this article from investmentterms.net

Rally, in stock market refers to a sudden, significant rise in price of a particular security or in the total market. This can especially happen after a continuous period of falling prices. Suppose the stock market has dropped in the morning, and the investors consequently make haste to purchase companies at lower prices, then the stock market is said to have rallied.

It is caused due to a huge sum of money that enters the market, bidding the prices up. The magnitude or length of a rally is dependent on the depth and volume of buyers, as well as the amount of selling they do. Thus if there is a greater number of buyers but less investors intending to sell, there is likelihood of a large rally. If the number of buyers matches the number of sellers, the rally most likely will be of a short tenure with the price movement being minimal.

Rally is a period of sustained increase in stocks, bonds and prices of indexes. This type of situation can take place either during a bull market or a bear market.

Bear market rally

source:http://www.zealllc.com/

A bear market rally refers to a rally that occurs after a great amount of downward trend. A bear market rally apparently is an indication of the markets making recovery. In other words it is turning around to a bull market. However this might signify a temporary trend. Because of the inherent unpredictability associated with this rally, it is also sometimes termed as a sucker rally. Many people are misguided into investing seeing the upward trend only to be deceived shortly, when markets do fall.

Bull market rally

source: http://blogs.reuters.com/globalinvesting/
This is a sustained, prolonged period of rising investment prices, faster than the historical average. One of the significant periods of bull market rally in the U.S. was in the early 1990s.

investing word of the day: Market Price

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Definition from http://en.mimi.hu/

"The value given to a share in the marketplace. In other words, the current quoted price of a share of stock."

Market value is the value anyone would accept base on a reference that anyone would acknowledge. For the purpose of stock valuation market value is the last traded price in any stock market. 

source: http://www.worldcorrespondents.com/

Earnings Per Share: One of the numbers to understand when investing

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source: http://cdn-viper.demandvideo.com/media/

Earnings Per Share or EPS is a measure of profitability just like the name itself.

There are lot of qualifications when computing this number but a simple computation is dividing the net profit by the outstanding shares at end of the period. As we have said it is an indicator of the companies profitability. It is a allocated share on the company's earnings to each stock. This number gives you an idea of the companies possible dividend. also by reverse computing you can compute the total net income by multiplying this number to the outstanding number of shares.

In the same way when choosing to invest one might just focus on the number itself, which is unwise. For example you are interested in two companies which has the same EPS. So you are undecided which to put your money on. Though this two companies have the same EPS by reverse calculation one can determine which company is generating income from capital efficiently. The better company is the one with lesser outstanding shares. Let say both has an EPS of 10 and Company A has 10,000 outstanding and Company B has 1,000. So in this case Company B is more efficient because it is able to potentially give its 1,000 shareholders 10 pesos dividend with a smaller capital investment.

PSE Website Part 7: Investing in PSE; a comprehensive guide

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Okay it seems that there are so many things that yo wanna know about stock investing in the Philippines right? You have searched and read a lot of blogs and Internet sources but seem not to get it. Well the PSE website has this link Investing at PSE.

All the basic info you need about stock investing are here but I believe you will have an information overload thus I created a one day at a time guide regarding the PSE website. 

Again reminder that having the right information in your finger tips is an edge in stock investing. Knowing where to get an accurate one is another thing. The PSE website is pack with such information but some information regarding the company you are interested has most of their information in there own website. 

I will discuss to you one way to keep updated about a certain company through Google Alerts on the next post.