Value of a Share

The value of a share is, theoretically, a measure of the expectation of the size of the dividend that the directors will declare at the end of their financial year. Much of the market fluctuation is, however, the result of investors seeking to make profits from trading in the shares rather than owning shares simply for the income they provide. There can be few hobbies more absorbing than ‘playing’ the stock market and one
reads of people who have made their first million this way. One does not, however, read of those who ‘lost their shirts’ so play the market by all means. but amateur or experts, stocks and shares or horses, only gamble what you can afford to lose. Look for the names of companies you know something about and note how they have ‘moved’. Most papers show this by indicating whether the price has gone up or down
during the previous day’s trading. Try to find out what the original (par) value of the shares were; this would be the theoretical original price of the shares. It is not unusual to find shares that have been around for a long time to have a par value of, say, 50 pence now being quoted at 350 pence. This is not so much a case of the market thinking the company is marvelous, but more the way in which shares in limited companies tend to keep pace with inflation. One needs to study a company’s  share price over a period of time and to compare it with the general trend (e.g. the Financial Times Index or the Dow Jones Index) in order to assess what the market thinks of how that particular company is being run.