Author(s)

Liang Zhuo, An Zhiyu

Corresponding Author

Liang Zhuo

ABSTRACT

In the past, many studies on stock investment are based on empirical studies of large sample data, but, logical analysis is applied in this paper to find three most essential and basic factors which determine the stock price based on the economic law. One of this three factors is inflation, which will influence the price of company’s assets and liabilities, the price of materials and labor, and the price of company’s products and services. It ultimately affects company’s stock prices. The second factor is corporate management which will determine the intrinsic value of company and influence company’s stock prices. The last factor is investor’s sentiment, when investor’s sentiment is generally optimistic, the stock prices will higher than intrinsic value, and when investor’s sentiment is generally pessimistic, the stock prices will lower than intrinsic value. A perfect investment strategy is proposed at the end of this paper.

KEYWORDS

Inflation, Corporate management, Investor's sentiment