I hear stock prices go up and down everyday. However, I'm unclear what causes these fluctuations. Can someone help?
2006-06-26 15:40:57 · 12 answers · asked by simple_gal 2 in Business & Finance ➔ Investing
It becomes physically worth more because of this:
(This is a really primitive example) Say stock XYZ is woth 1.00 dollars. Joe owns one share of XYZ that he wishes to sell. Paul heard that XYZ is coming out with a really cool new product, and he wants to invest in the company by buying one share of it. This creates demand for the stock, so price will increase. Paul agrees to buy his share from Joe for 1.01 dollars. He pays a premium of one cent because he created demand for it, and upon the transaction, that stock is up .01 cents that day.
Hope that helps...
2006-06-26 15:49:40 · answer #1 · answered by Matt 1 · 1⤊ 2⤋
Fluctuations in a stock price can be caused by a variety of things. Usually daily fluctations occur due to the demand of the stock by the market (the buyers). The more the market wants the stock, the higher the price will climb. The more the market does not want the stock, the lower the price will fall. This is the primary factor. Several things cause the demand for the stock to increase and decrease, like press releases, quarterly earnings statements, etc.
2006-06-26 15:46:19 · answer #2 · answered by RMC 2 · 0⤊ 0⤋
Investors are either interested in buying a particular stock,or selling it. The buyers offer a bid for the stock and the sellers offer to sell at an "asking" price. On a listed stock, e.g., on the New York Stock Exchange, the bidders and askers are brought together through their stock brokers and a price is agreed upon. Now, if there are more buyers than sellers, the bid price, and ultimately the agreed to price, keeps getting pushed up. The converse is true if there are more sellers than buyers. Thus, the market price, up or down, is determined by the demand or supply of the stock on a given day.
2006-06-26 15:59:08 · answer #3 · answered by Anonymous · 0⤊ 0⤋
It based on supply and demand share holders in regarding to future earning of the X company.
Here is how it works,the company A issue 1,000,000 share at $1 to raise the capital for $1million and it is selling at the NYSE. Currently if the company has been making net profit of $200,000 annually, this company is making 20% return.
If the investors (buyer) thinks that company A will continue to make this return for years to come then he is willing to pay more than $1 stock and in order to get the stock. If there is more than one buyer then will keep bidding how much they willing to pay for this stock. If there is more buyers than sellers, then, the stock price will climb up. The stock might go to $1.37
On the other hand, if investor believe that A company will lose money or can't earn income as much for years to come, then he is willing to sell it at lower price. If there is a more sellers than buyers, then, the stock price it will come down $0.90.
However, there is equal transaction of buyers and sellers(which is impossibe) then the price might not change at all.
Here is a good link http://www.moneychimp.com/articles/valuation/stockvalue.htm
2006-06-26 16:51:15 · answer #4 · answered by cooldude_91801 2 · 0⤊ 0⤋
A number of items cause stock prices to change: company earnings, investor sentiment, national and international events etc. Best bet is to look for articles on how the stock market works. They should help you
2006-06-26 15:43:27 · answer #5 · answered by Anonymous · 0⤊ 0⤋
What makes the price go up is what people are willing to pay for it and are paying for it. It can be becuase some good news came out, or bad news, or no news. There are thousands of things that can cause it. But the price people are actually paying is why it goes up.
2006-06-26 15:47:39 · answer #6 · answered by Anonymous · 0⤊ 0⤋
Simply speculation on a stocks value based on what the company does or what happens to it.
2006-06-26 15:43:06 · answer #7 · answered by NateTrain 3 · 0⤊ 0⤋
it's very simple. if something bad news or bad happened with one company, it's stock price goes down
2006-06-26 15:47:40 · answer #8 · answered by S 2 · 0⤊ 0⤋
If the number of shares bought is bigger than the number of shares sold then the price rises.
If the number of shares sold is bigger than the number of shares bought then the price decreases.
If the number of shares sold is exactly the same number of shares bought then the price stays the same (This case is impossible)
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2006-06-26 19:10:03 · answer #9 · answered by Anonymous · 0⤊ 0⤋
Either more buyers than sellers (price goes up), or more sellers than buyers (price goes down). Supply and demand.
2006-06-26 16:08:55 · answer #10 · answered by Anonymous · 0⤊ 0⤋