4 Things That Drive Stock Prices

…There are four things you can depend on for being the strongest drivers ofinvesting4 stock price, and to a greater extent, the price or value of anything. Pay attention to these four things and you’ll have a better feel for future stock price direction, whether it be up or down.

The original article has been edited here for length (…) and clarity ([ ]) by munKNEE.com – A Site For Sore Eyes & Inquisitive Minds – to provide a fast & easy read.

(1) Supply and Demand

  • A decreasing supply of sellers and/or an increasing demand from buyers will increase a stock’s price.
  • In contrast, an increase in supply of people willing to sell and/or a decrease in demand from those willing to buy, decreases a stock’s price.

Supply and demand pull against each other until the market finds an equilibrium price.

(2) Earnings

Company earnings are reported by every public company four times per year. An earnings report shows the profits a company made, along with projected earnings for the next quarter. Company earnings are a major driver of investment activity and stock price movement.

(3) Stock Price Itself

…Price moves to reflect what investors think a company is worth today, in addition to what a company is projected to be worth in the future. As a company’s current value and future value change, the stock price will reflect it like a mirror.

(4) Market Capitalization

Market capitalization gives you the company’s valuation. The combined value of each individual share of stock together tells you what investors think the company is worth…

Conclusion

The result of these collective opinions is how the world’s greatest companies come to consensus on their valuation and stock price. To make your opinion part of the consensus, all you have to do is get invested. You have the right and the ability to use your vote and stake your claim in the future profits and wealth of your favorite companies.

Come join the markets — the more the merrier. The more investors there are in the markets, the more efficient the markets become.

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