• Australian (ASX) Stock Market Forum

Reasons for reduction in share value?

Discussion in 'Beginner's Lounge' started by Chaka1988, Oct 5, 2009.

  1. Chaka1988

    Chaka1988 Well-Known Member

    Posts:
    47
    Likes Received:
    0
    Joined:
    Jul 3, 2009
    Hey

    I have bought some shares a week ago. Since than the share value continuously drop without any explanation or any announcements? what are the reasons for that?
    Also, does it mean there are more sellers than buyers of this share?

    thanks
     
  2. nomore4s

    nomore4s Commonsense isn't that common

    Posts:
    2,892
    Likes Received:
    0
    Joined:
    Jan 11, 2007
    Re: reasons for reduction if share value

    There could be a million reasons to this but the fact the market in general has stalled probably hasn't helped.

    It would generally mean that there are more sellers then buyers atm but due not knowing what stock you are talking about it is hard to give you any reasons.
     
  3. MACD

    MACD Well-Known Member

    Posts:
    55
    Likes Received:
    0
    Joined:
    Aug 16, 2009
    It could just be bad luck and bad timing!

    This is what happens in the market. Shares go up and shares go down. You have a 50% chance of getting it right. You need patience and discipline to be a trader.

    Our market is also affected by the US market, which has been down the past few days.

    So long as you have a sound strategy (plan), a profit target and stop loss in place then there is nothing to worry about.
     
  4. Chaka1988

    Chaka1988 Well-Known Member

    Posts:
    47
    Likes Received:
    0
    Joined:
    Jul 3, 2009
    I have nexus shares. I bought them because they are about start to come up with some profit with their Longtom gas project. However, their shares drop steadily. I really dont understand that :(
     
  5. Dreadweave

    Dreadweave Well-Known Member

    Posts:
    50
    Likes Received:
    0
    Joined:
    Sep 17, 2009
    Hi there mate, Iv done some research on your shares, rest assured that you will probably make a profit on your investment, as the longtom pipe-laying/maintinance has finnished and the pumping will soon commence, you are going to start to see some value increase in your shares.

    the recent drop is mainly because of market instability and basically "mis conceptions" in the value of shares.

    if you do some research youll find that the ASX has dropped considerably in the past few days and this reflects the market in general, it can have an effect on all shares. Please sit tight and feel confidant that you have made a good choice in your investment, and remember that investments can go up and down, but I would advise that your investment is as sound as a sound investment can be in today's market.

    good luck mate, and be sure to keep up with current events in the industry.
     
  6. skc

    skc Well-Known Member

    Posts:
    7,773
    Likes Received:
    21
    Joined:
    Aug 12, 2008
    With languages like that you better list your ASIC adviser license number! OR get a job with Storm Financial...
     
  7. skc

    skc Well-Known Member

    Posts:
    7,773
    Likes Received:
    21
    Joined:
    Aug 12, 2008
    It is not that your language is ambiguous. It is the fact that it sounds like advice and those are not allowed on this forum by law.

    You can post your view about a stock, you can't tell others what to do.

    Read the forum posting rules.
     
  8. Dreadweave

    Dreadweave Well-Known Member

    Posts:
    50
    Likes Received:
    0
    Joined:
    Sep 17, 2009
    Thankyou for your prompt pick up of my mistakes. I hope that my opinion will not be considered advice and merely the opinion of a fellow peer. In future I will be sure to adhere to the forum rules and keep my language in a purely amateur context.

    I apologize to anyone who may have taken action on my advice.
     
  9. Julia

    Julia In Memoriam

    Posts:
    16,986
    Likes Received:
    0
    Joined:
    May 10, 2005
    What was your reason for buying them?

    The SP was already flat following a significant downtrend for some time.

    As has already been pointed out, there could be any number of reasons, the same number that indicates this SP has been going nowhere positive for some time.

    Don't think that just because you believe a company is just the greatest thing on the ASX that the SP will necessarily reflect your belief.

    I'd suggest buying "How to Profit in Bull and Bear Markets" by Stan Weinstein. This will offer you a basic understanding of how price action works.


    Think about this: for someone to sell shares, someone has to buy them.
     
  10. Chaka1988

    Chaka1988 Well-Known Member

    Posts:
    47
    Likes Received:
    0
    Joined:
    Jul 3, 2009
    I bought the shares because my mate(noob in shares) advised me to do so. I researched for a bit and found that it has a nice potential of going up in value.

    Another question, lets say there is a share with no sellers at all, is it still possible to purchase the share?
     
  11. Julia

    Julia In Memoriam

    Posts:
    16,986
    Likes Received:
    0
    Joined:
    May 10, 2005
    What do you think, Chaka? Is that possible?
     
  12. 888

    888 Active Member

    Posts:
    27
    Likes Received:
    0
    Joined:
    Sep 21, 2009
    LOL there is a reason they called it share MARKET. It's where people can buy and SELL shares. So yeah, if there's no one selling, you can't buy. But from my observation, you can always find someone selling, finding someone buying is the problem.
     
  13. Chaka1988

    Chaka1988 Well-Known Member

    Posts:
    47
    Likes Received:
    0
    Joined:
    Jul 3, 2009
    I still dont get the point of restricting it so the buyers buy the shares from the sellers.
    And if a company needs more funding, where can they get it from?
    I thought they could do it buy selling more shares...
     
  14. skyQuake

    skyQuake Well-Known Member

    Posts:
    2,782
    Likes Received:
    3
    Joined:
    May 1, 2007
    Its called price discover.
    Those are secondary raisings. Eg rights issues, placements, spps.
    If companies keep issuing more shares it dilutes the existing holders.
     
  15. milothedog

    milothedog Well-Known Member

    Posts:
    51
    Likes Received:
    0
    Joined:
    Mar 6, 2008
    It may be a good idea to do a little more reading on the basics of how the share market works....the ASX is a start point for the basics...
    http://www.asx.com.au/resources/education/index.htm

    I actually hold a small parcel of NXS and will make no comment either way on the "worth" of this stock.... all I will say is you have chosen one heck of a stock to give lessons about "the market"....and.... commodities exposure, capital raisings, dilution, perceived value, project risk, project delays, JV partners.....sheesh...I could go on.....but won't :)
     
  16. Julia

    Julia In Memoriam

    Posts:
    16,986
    Likes Received:
    0
    Joined:
    May 10, 2005
    I've been thinking the same. Chaka, it would have been good to educate yourself before actually buying any shares.
    Never too late to start, though.
     
  17. SmellyTerror

    SmellyTerror Well-Known Member

    Posts:
    272
    Likes Received:
    0
    Joined:
    Sep 7, 2009
    (Note: I've not checked the particular share, and certainly don't hold any. This is general advice only).

    In general, though, consider: you bought because the company is about to make more money, right? So, you were willing to buy, and you expect the price to go up.

    Well, so might lots of people have done, and they've probably been looking at this for months. That means the price might already reflect these expected profits. They've effectively become a bit of a non-issue, and might even be a liability if they're not as high as people were expecting.

    That's why a company who posts a big profit can actually see the share price go down: people were expecting more.

    So the price might be coming down because they went up too far, or because something has happened to make that expected profit less. Have there been commodity price changes that mean they'll have higer costs or will have to sell their product at a lower price? Do they have a lot of debt, and will rising interest rates impact their profits?

    Knowing that a company is going to make lots of money only really helps, from a short term share price point of view, if you know about it before many other people know about it. Otherwise everyone who knows will buy the shares and the price will go up.

    By best performer is in an area where I know a bit more than most traders or investors - that is, I knew a product would be more valuable than most people realised, that the company would make a lot more money than expected in the market. I buy the shares and wait for everyone else to find out what I know - and hence watch the price go up.

    ...but finally, you have to expect wobbles, and it really isn't too terrible if your shares drop a bit after you get them. Check the chart and see how, even in a steady trend up, there will be drops of 5-10%. A solid uptrend will simply keep recovering by more than that. That's why you shouldn't have a stop to close behind an initial buy price: even good trades can fall a bit at first.

    A solid, profitable company (if this is one) is probably a good long term investment, regardless of short term movement. If that's what you're after, and what you believe you've got, then more luck to you.
     
  18. Chaka1988

    Chaka1988 Well-Known Member

    Posts:
    47
    Likes Received:
    0
    Joined:
    Jul 3, 2009
    Cheers for the comprehensive explanation. The only thing I can do is to wait and see what happens...
     
Loading...

Share This Page