Fundamental analysis of the stock market: internal news of the issuer
An important step in fundamental analysis is to Analysis of news and events in the company itselfYou can use this method to predict the future price of a company's stock. This method can be used alone or in conjunction with the two other methods previously presented: macroeconomic analysis and industry analysis to predict future stock prices.
Initial public offering and other factors
Pay attention to mergers, acquisitions, IPO, SPO, Splits. Each specific situation must be considered in detail. You have to think about which side of the deal will benefit the most. But traditionally the news that bring money into a company has a favorable effect on its shares, while the news that requires an outflow of financial resources sometimes leads to a local decline in the stock. The only exceptions are. Russian IPOs. Here in the last five or six years we have not seen a single major offering followed by an increase in shares on the stock exchange when they come up for trading.
Additional issues of shares
I wonder how stocks react to additional issues. Here everything depends on the price at which the next block of shares will be sold. The prices of the shares of the first package in the market are most often pulled up to the price of the additional issue. A vivid example can be recalled. An additional issue of AvtoVAZ shares in the summer of 2010. They were priced at 13-14 rubles on the market when the additional share issue was announced at 40 rubles. In less than three months the market quotations caught up with the price of the second issue, adding more than 189%.
And it cannot be said that this is observed in the shares of iconic companies, for which the funds and big players are fighting. For example, the shares of Aptek36and6 are constantly achieved by their cheap additional issues. At the end of 2009, when the company's shares were priced at about 280-270 rubles, an additional issue was announced at about 60 rubles and the securities slowly but surely went down to this level.
Many novice traders perceive these company events as opportunity to make a fortune. In practice, not many people know how to do this. Because here it is important not only experience and a fine calculation, but also a quick reaction, and the ability to determine the right amount for the deal.
Personal experience as a practicing trader
Personally, I watch the news to know that there are no big, risky changes in the company right now. And there are no pitfalls in the path of the stock.
When racing for some news, remember that in many ways it may already be is built into the prices sharesIt may not turn out to be at all what the experts and analysts see. Know that while there are processes of mergers or restructuring of companies on which you can supposedly make money, for a certain period of time funds in your portfolio may be blocked. This period can be from a few days to a few months, which can be critical in the case of some domestic force majeure, for example. So don't go for broke.
No one will provide you with statistics on successful and unsuccessful trades for the news, because each time they are accompanied by different circumstances. And without knowing the past results, you will not step confidently into the future. If you're used to focusing on the past, taking the best experience and looking for the key to the future in it, you will be interested in the following articles in our series technical analysis of the stock market.