Is the SIA Overvalued? Is the SIA overvalued? Some say yes, and here’s why…
The SIA has been one of the best-performing stocks over the past year. It has more than doubled in price over the past 12 months and it’s not showing any signs of slowing down anytime soon. Should you buy in? Some say yes, and here’s why… This year alone, the SIA has increased its share price by almost 120% and shows no signs of slowing down anytime soon. It is up almost 50% in just the last month! So what’s behind this massive increase in share price? Why is everyone buying shares of the SIA? And should you invest too?
The latest news
Shanghai Composite Index has been on a downward spiral since early January. This prompted some financial analysts to question if this was just a correction or the beginning of something more significant. Recently there have been reports that some experts are predicting that China is in danger of having an economic crisis due to it being potentially in a state of deflation. What does this mean for investors who have large holdings in Chinese stocks?
What went wrong with the price spike
The head of the Swiss National Bank said that they’re monitoring how these changes affect their currency. They also said that they are working to do what they can to avoid excessive volatility in financial markets. What does this mean for Bitcoin’s price change today? The US dollar is usually backed by gold or other assets, while bitcoin’s value is based on several different things such as supply and demand. In theory, when more people want to sell Bitcoin than buy it, the price goes down. We’ll have to wait and see if this is enough to slow down Bitcoin prices soon.
What we can learn from this story
Sia has shot up over 1,000% in less than 3 months. This is unbelievable growth. Should we invest in this company now before it shoots up even more
or should we wait? The answer: who knows. Nobody can predict when it will shoot up next or how high it will go (which some are saying could reach 10k). With no clear way to know what to do, it would be best to look at your risk profile before deciding on whether or not you want to invest in the cryptocurrency market. Remember that different people have different risk profiles so this is just an example of how your personality might be correlated with what you should do next with your money.
How we can apply this example in our everyday life
There are several items you should consider before determining if a security is overpriced or not. Firstly, be wary of any possible market bubbles that might exist for that particular asset. Markets can be prone to herd behavior where individuals purchase stocks with irrational exuberance because everyone else is doing it. Beware though, sometimes even well-informed people may still buy into a bubble because they think it will continue forever. Secondly, always research past performance numbers to see how their stock fared in periods of crisis as well as prosperity (and which made them successful in the first place). Thirdly do some fundamental analysis to ensure that all financial statements are reasonable and make sense – this can show what does or doesn’t drive their growth and reveal underlying issues for their business model.