Understanding The Price Of Stock

Discuss the following question to the post below:

  • Do you agree with your peer's argument to either invest or not invest in their company? Explain why or why not, making sure to also include information not previously shared by your peer.

Discuss how the stock for your company is trending. Explain why the stock is in either an uptrend or downtrend.

Understanding The Price Of Stock

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Prior to January of this year, Microsoft’s stock experienced a period of steady growth, growing from roughly $240 a share to around $350 a share. However, the market has been in a downward trend since January of this year, with Microsoft’s stock dropping to around $300 a share. There are multiple potential explanations for this. Some speculate that it is the market reacting to the Federal Reserve’s intentions to raise lending rates multiple times over the course of 2022, while others think that tech stocks became overvalued during the height of COVID-19 lockdowns, and this is simply the market correcting itself (Savitz, 2022).

Discuss some of the factors, including environmental, sustainable, and governance (ESG) factors, that you believe have impacted the stock performance and why.

The main factors for Microsoft’s growth through 2021 were a) a historic bull market driven by unprecedented government stimulus and intervention, b) a regulatory environment that (despite grumbling from certain parties) is still very friendly to tech companies and c) the general overperformance of tech stocks relative to other stocks during the pandemic. As much as it would be nice to think that ESG, or other CSR initiatives contributed to Microsoft’s performance during this period, I doubt they were main contributors.

Convince your peers to either invest in your chosen company or to not invest in the company. Explain your reasoning.

I want to take a slightly different approach and say that picking individual equities is very hard! It’s not for the faint of heart or for those without a significant amount of time to dump into studying market trends and making predictions. Instead, I would suggest that you sit down with a qualified financial advisor to have a conversation about your long-term financial and investing goals. When something goes wrong with your home’s furnace, most people’s instinct is to call a qualified professional to diagnose and fix the problem. Why should you treat your investment portfolio any differently?

P.S. If you decided to do this, designations such as CFP (certified financial planner) are always great to see since it means that the advisor is held to a fiduciary standard. Additionally, make sure to look them up on BrokerCheck to see if they have any complaints filed against them.

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