There is a great difficulty in understanding the rise of stock price. For technocrats, this problem has nothing to entangle. Some people buy, some people sell, but for the price voting faction, this problem is quite complicated.
For the stock price rise, we must first find the entrance to the positive solution. This entrance is the promotion of intrinsic value. In fact, many people have ignored this point and even misinterpreted it. What is the promotion of intrinsic value? Some people subconsciously regard it as profit growth and think that the intrinsic value of profit growth will increase. In fact, this is also wrong. In fact, to truly understand the stock price rise, we must have the thinking of the gold content of equity.
Stock price = price-earnings ratio × earnings per share.
As can be seen from the above formula, there are two reasons for the stock to rise.
1. Earnings per share rose and the price-earnings ratio remained unchanged. At this time, holding stocks is to make money for the growth of the company, which is called value investment.
Second, earnings per share remain unchanged and the price-earnings ratio rises.
This time is to earn money with fluctuating P/E ratio. Earning income in this way is called speculation. It is difficult for the profits of listed companies to change much in a few days, so in the short term, the rise of stock price is caused by the increase of P/E ratio. If you want to make money through the development of the company, the only way is to hold it for a long time. Whether it is a stock or a fund, it is important to hold it for a long time. But for the master, the combination of value and speculation is the strongest.
Equity value is the essential driving force to promote the stock price rise, and equity value is the present.