Price and valuation of shares
The share price, as well as the price of any product orservices, by and large depends on the supply and demand for this resource at a given time. The opportunity to buy this or that share depends on the form in which the joint-stock company that issued the shares was established in its organizational and legal form.
If it is a closed joint-stock company, thenthe owner of the shares may be a strictly defined circle of persons - founders of the joint-stock company. When creating a company, shares among the founders are distributed at a price not lower than the nominal value specified in the charter and the memorandum of association. To buy shares of a closed joint stock company, not being its shareholder, it is possible only if they are sold by a shareholder, and the remaining participants (in some cases the company itself) refused to purchase them at the price at which they are offered. Own estimation of shares in this case can be made on the basis of data on net assets.
The net assets of a company are the differencebetween the assets of the company (where assets include the first and the second section of the balance sheet except for the costs of buying shares from shareholders, arrears in contributions to the authorized capital and including the amount of deferred tax assets) and liabilities. The liabilities include long-term liabilities of all types, short-term obligations on loans and other short-term liabilities (indicating the amount of provisions for contingent liabilities), debts to creditors and founders for income payment, reserves for future expenses, including deferred tax liabilities.
The net asset value received is divided intothe number of shares, thus, is calculated - how much are the shares worth. Information on net assets is disclosed in the annual financial statements or can be calculated on the basis of quarterly balance sheets.
Valuation of shares based on net assets is appropriate andfor shares of open joint-stock companies (OJSC), not traded on the stock exchange. It is part of the fundamental analysis, which also includes an analysis of the general economic situation, an analysis of the state of the industry and the company itself, whose shares are planned to be purchased. In the event that the stock is traded on the exchange, it may have a price both above the net asset value per share and below. For example, Gazprom shares as of spring 2013 are twice cheaper than their value based on the estimation of net assets. This means that there is no demand for these shares in the market at a higher price.
If the stock's own valuation ispotential owner of the securities difficulty (this occupation requires extensive knowledge), then the decision on which stocks to buy can be taken on the basis of analytical materials offered by major investment companies and banks. It is necessary to read several reviews and make a choice, while it is very important not to invest the last money in the stock, as well as all available free cash.
Valuation of shares when deciding on their purchaseAt the exchange should take into account the cost of energy carriers in world markets, tk. The Russian economy is extremely dependent on this factor. If prices fall significantly, then it is better to wait with a purchase. When buying securities of other mining companies, it is also necessary to take into account the change in the cost of extracted raw materials on the Russian and world markets. Due to the fact that the Russian stock market depends heavily on foreign funds, it is necessary to pay attention to the movement of indices on the Tokyo, London, New York and other exchanges. Stock prices sometimes rise on the eve of the closure of the register if it is expected to pay tangible dividends or if a large buyer interested in an enterprise appears on the market.
Operations in the securities market requirecertain educational training, so if there is a desire to receive stable or high incomes in this field, it is necessary to study fundamental and technical analysis, as well as gain some experience.
