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Valuentum Team


Posts:38
 

What drives stock price movements?

a) Value investors
b) Growth investors
c) GARP investors
d) Momentum investors
e) All of the above

Posted: 27 Jan 2013 13:55 Back to top

Valuentum Team


Posts:38
 

In such a simple multiple choice format, the answer becomes clear. Stock prices are determined by e) all of the above. A company's intrinsic value is based on the present value of forecasted free cash flows and after adjusting for its capital structure. However, prices reflect the collective opinion of each type of investor from value through momentum.

Only with an understanding of each type of investor can the individual have an understanding of what drives stock prices. Said differently, cash flow drives intrinsic value, but it is the interpretation of that cash flow stream that drives stock prices.

The Valuentum investor is focused on understanding how investors evaluate a company such that the best performing stocks can be identified. All else equal, increased interest and more buying in a stock is often the catalyst for an undervalued company to converge to intrinsic value.

Valuentum strives to identify undervalued stocks that are just starting to exhibit strong technical and momentum indicators.

Posted: 20 Feb 2013 19:16 Back to top
Forum Home | Stock Market Trivia | What Drives Stock Price Movements?
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