MARKET PERCEPTION

13 January 2017 By PDSNET

The way in which the investing public in general feel about a share,  an industry or the market as a whole.  In other words, do they see a share as highly-rated or poorly-rated? Are they expecting its price to go up or down?  Usually, a company with a good track record is perceived as having shares of "high quality". In other words, there is a positive perception. A company that realises consistent growth and profits, and which pays out regular dividends is usually perceived to be a high-quality share which will increase in value over time.  But mostly what investors like is consistency of earnings where the profits go up every year by 10% or 15%. On the other hand, if a company does not have consistent earnings and or growth it is likely to have a negative or poor perception, as investors are not likely to see its shares as a quality investment that will reliably increase in value.  The perceptions of the market are not always correct.  In fact, as a private investor, you want to look for shares which are perceived incorrectly, because then you will make money when the perception changes and the big institutions catch on to the opportunity which you have already identified. A similar point can be made for an industry or the market as a whole. Are investors generally bullish or bearish, optimistic or pessimistic? This general perception is often deeply rooted and can have an enormous impact on the trend of share prices. In a bull market about 80% of shares go up and vice versa.



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