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The
Industry's Financial Health
A company's share price
may go up or down depending on whether investors think
that its industry sector as a whole is about to expand
or contract. It is well recognised that many industries
expand and contract in cycles.
For example, the
building industry is cyclical and very dependant on
interest rates. Even if a particular building company
may be doing well financially, and have plenty of orders
on its books, if the building industry in general is
declining, for example when interest rates rise,
investors might question the company's ability to keep
growing. In that case, the company’s share price may
fall.
Next:
Economic Trends
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