UK Accounting Glossary
Capital appreciation is defined as any increase in the market price of a stock. Investors who are long the market derive their trading profits from the capital appreciation of the stocks they hold. Capital appreciation can stem from a number of factors: capital appreciation can result from a company’s actual increase in growth or profits, or capital appreciation can be a result of a company’s anticipated future prospects, or it can result from other factors. Day traders and other short-term traders who rely on daily market fluctuations (i.e. volatility) are generally not as interested in a company’s capital appreciation potential as is a long-term investor. Genuine long-term capital appreciation is rooted in a solid foundation of good management combined with a viable product as well as a number of other market factors.
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This glossary post was last updated: 4th February 2020.