02-10-2005, 09:46 PM
What stock market index are you referring here - KSE?
1. what exactly does this index mean?
Ans. Stock market indices may be classed in many ways. A broad-base index represents the performance of a whole stock marketâ and by proxy, reflects investor sentiment on the state of the economy.
2. what can we conclude about the stock market given any index?
Ans. If the index is reallying we are in the 'bull' market - on average the share price of the stocks that make up the index are 'on average' going up, and vice versa. I used the word 'on average' deliberately because just the index is rising, as is the case at most indexes presently, it doesn't mean that an investment in equities or shares will be successful. The index represent an average view and therefore there will be some sectors who are in red and others in the blue.
3. to make it further clear this index respresents the state of the market but what can an investor perceive from such statistics?
And. If the index is going up it is precieved that the stock market is doing well and trending higher - again 'on average'. Reverse is the case if the index is falling - as was the case for most of past 5 years.
BTW are you thinking to involve in the stock market? Why KSE is that's the case. KSE hasn't got much volatility and if you are an equities or for that matter any asset class trader, you want volatility in the market to gain 'significant' returns.
Never put any money on financial markets if you can't afford to lose 100% of it. And for that matter there are other hybrid securities where the downward loss is infinite if your position isn't hedged.
Feel free to post any further queries.
DT
1. what exactly does this index mean?
Ans. Stock market indices may be classed in many ways. A broad-base index represents the performance of a whole stock marketâ and by proxy, reflects investor sentiment on the state of the economy.
2. what can we conclude about the stock market given any index?
Ans. If the index is reallying we are in the 'bull' market - on average the share price of the stocks that make up the index are 'on average' going up, and vice versa. I used the word 'on average' deliberately because just the index is rising, as is the case at most indexes presently, it doesn't mean that an investment in equities or shares will be successful. The index represent an average view and therefore there will be some sectors who are in red and others in the blue.
3. to make it further clear this index respresents the state of the market but what can an investor perceive from such statistics?
And. If the index is going up it is precieved that the stock market is doing well and trending higher - again 'on average'. Reverse is the case if the index is falling - as was the case for most of past 5 years.
BTW are you thinking to involve in the stock market? Why KSE is that's the case. KSE hasn't got much volatility and if you are an equities or for that matter any asset class trader, you want volatility in the market to gain 'significant' returns.
Never put any money on financial markets if you can't afford to lose 100% of it. And for that matter there are other hybrid securities where the downward loss is infinite if your position isn't hedged.
Feel free to post any further queries.
DT
