Any stock is priced based on the expected future earnings. If a company has exposure (business) in other lands, those sales must be converted into dollars in order to price a stock.
The “value” of the earnings don’t change. (For example, an ounce of gold is still an ounce of gold. The number of dollars that it is worth will fluctuate—even though the physical “value” does not.) The exchange for the value does. If the euro tanks, it will take more euros to purchase the same value of goods and services priced in dollars. Therefore, the potential sales will drop.
If sales drop, revenues drop, and the forward looking value of the stock will drop.
Other things like unemployment, inventories, etc will all have an impact.
It can all be very complicated.
Personally, I buy shovels to bury my gold in holes around the property. The sad part is I forget where I bury it.
Where do you live, again? :-)
>> Any stock is priced based on the expected future earnings.
In theory, anyway. That would be the “present value of the income stream” valuation. In reality, the marketplace prices stocks according to a variety of rational and irrational criteria. Heck, often they’re just a medium for speculation — shares might as well be blackjack chips.
>> It can all be very complicated.
Amen, brother. And it’s not just math; an understanding of human nature is required. I can do math but human behavior baffles me.
>> The sad part is I forget where I bury it.
Send me your address, I’ll bring my shovel and help you look!
FRegards