Question

7. Some stock analysts and stock market analysts say that optimism is one of the most important factors for individual corporate stocks and for the stock market as a whole. What does this mean? Explain why you agree or disagree.

Answer 1

Ans :Yes, I agree that Optimism plays a vital role for individual stocks and the stock markets . A key factor is the optimism of investors. If they receive economic news that gives optimism then they are more likely to buy shares.. This is why in the depth of a recession, stock markets can start to rise. Investors are always trying to predict the future. Therefore if they feel the worst is over – the stock market can rally – even when economic fundamentals remain poor.

                                                                                                                          The company future expected plan to expand in domestic as well as international market and increase in revenue from the operation and in turn will increase the firms value .For example we can take Apple corporation which always turn up with new innovative products in the market which are unique in nature creating a separate demand for its products like mobile,Laptop , desktop etc creating a better revenue for the firm and creating a optimism about the same in the investor mind and pushing them to invest in the firm and the projects associated and as a firm perform better it pushes others to perform better creating a optimism in the market.

Characteristics of Optimistic Investors

1. Positive Investor : Business undertakings are surrounded by uncertainties that make it hard to operate without some degree of confidence. A great investor does not attribute success purely to hope, but she will always keep a healthy dose of it while taking the necessary steps to lessen risks. Again, an investor that is too optimistic or hopeful may fail, but an investor that is too pessimistic may not even manage to begin their trading. Here, it’s all about a balance.
2. They realize that not all options will succeed but are sure that not all will fail, too.
3. They are ready to learn from mistakes and improve over time with hands-on experience rather than trying to learn the rules while out of the game, as in the case of a strong pessimist.
4. They are less prone to giving up after a setback as they take each scenario as a learning opportunity rather than an all-or-nothing battle.

And in turn these investor create a push for the individual market as a whole as well as the stock market.