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In the stock market, stock prices are always moving in different patterns, whether it goes up steadily or it stays stagnant for quite a long time, before surging up to a new high. These two are just some example where investors like the most.

However, what caused the stock price to move differently? Companies actually has little to no control over the share price since management will not sell their shares easily. Hence, the factors that are affecting the share price fluctuation are actually the different buying and sell pressure from investors, either retailers or institutional.

If there are less investors participating in the buying and selling activities, the price will mostly stay stagnant for a long period of time, before some other investors realise the potential of a stock. On the other hand, if investors are looking forward to buy the shares of the stock, the share price will soar as more people are more willing to buy the stock, without concerning the price.

The examples given below are PENTA and SCIENTX. PENTA is a growth company that has maintained their growth for the past 10 years. As we can see from its price movement, that PENTA is slowly but surely, moving upwards, which means most investors will love to buy this stock regardless of how expensive the share price will be. On the other hand, SCIENTX has been stagnant for around three years, where its previous high is at RM9.5+, and keep hitting the same bottle neck for the past three years, and only breakthrough it recently, due to fantastic result.

However, these two types of movement will have their own risks. If investors look through their price movement, PENTA will have a higher fluctuation and can drop a lot in a week, but also rebound quicker. This is due to its relatively higher PE ratio and the investors’ emotions. On the other hand, SCIENTX will remain stagnant even if the market condition is bad due to its low volume and low PE ratio, but not much capital gain will be obtained by the investors.

In short, investors should always prevent themselves from buying at a high point, and provide themselves a fairly decent margin of safety. Besides, it is important to not allow emotions take over you, affecting your decision making that may end up causing you suffering from losses. Do remember that share price is only affected by investors but not business itself. If the business prospect is still very attractive, it is worth keeping it for a longer term.







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