Determine whether stock prices are affected more by long-term or short-term performance
- Determine whether stock prices are affected more by long-term or short-term performance. Provide an example of the effect that supports your claim.
Respond:
Stock prices are affected more by the long-term performance because short-term performance can only affect the immediate movement of the stock price whereas the long-term performance of the company will be deciding the ultimate road for the company. One can say that the short-term effects are not sustainable for longer periods and the long-term trajectory of a company will decide the company’s future and the company’s stock price in the long run. For example, during COVID crisis big company stocks like Apple and Amazon had fallen from their highs of about 40 to 50%, whereas the long-term trajectory of these companies was higher and they recovered over 100% from the lows within a short span of months so it can be said that long-term trajectory of a stock will be deciding the stock performance.
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