What makes stocks go up and down?

I always hear supply and demand, but what does that really mean?

It has to do with people's perception of the stock (and underlying company) and their desire to own it. If the perception is that the company is doing well, and more people want to buy shares of the stock than want to sell it, the price of the stock will rise as buyers are bidding up the price to purchase it. Likewise, if the perception is that there are problems, and more people are wanting to sell the stock than are wanting to buy it, the price of the stock will fall as sellers will cut their asking price in order to sell their shares.

Stocks move in response to supply and demand. Each company authorizes a specifice number of shares that are issued for the company. As more people attempt to buy this stock the price increases. (If more people are attempting to sell, the price goes down. The company's financials, future prospects for profit and P/E ratio all play a part in whether there is a demand for the stock or not.

The current price is the last price that it sold for.

If someone pays less for it, then the price goes down.

If someone pays more for it, then the price goes up.

Everything else is fluff.

Let's say that everyone is crazy about iPhone now, and so the company Apple expect to manufacture a lot to sell. However, Apple need a lot of money to make that happen. People see the demand of iPhone and they invest in Apple. So Apple has the money and so they make more iPhone and sell them all for a lot of money...increasing the supply to meet demand. So in the end, Apple make good profit and people also make profit (earning) from Apple good sale. The stock price of Apple go up, and people sell the Apple stock to make another round of profit.

Supply and demand. Think of it like bargaining for a used car.
The seller thinks it's worth one price... the buyer another.

It's truly that simple.... on a much larger scale!

if the asnwer was simple, anyone could make a fortune in the stock market without a lot of work, risk, and worry.

Since that isn't possible [at least without the work, risk, and worry], it seems obvious that the answer isn't simple.

***
Although it seems obvious, for every transaction in the stock market there is both a buyer and a seller. Since they voluntarily exchange positions at some agreed on price, it follows that they have different perceptions on the value of the shares and the the likely future for that value.

Now, if everyone had the same opinion as to the company's future and the same current value for an ownership position, there would be no trading -- either everyone would want to buy or everyone would want to sell -- HOWEVER, this holds only at the current price.

At some different price, some of the participants would voluntarily change their minds and take the better deal the other guy is offering. Better deal could mean either having cash today or having shares today.

Compounding the fun, we come to the idea that different possible holders have different time frames and different plans for their capital. Some prefer less risk and more cash today. Some have a very short time horizon [day traders usually close all positions before the market closes each day, for example]. Others have higher risk tolerance, if they think you're going to get well paid for that, and still others have long or very long time horizons.

On top of that is the observed phenomenon that not all traders are acting fully rationally. Some won't sell if they own shares because they can't admit to losing. Others can't see that this company is a screaming bargain because they're afraid the shares will trade even lower next week (and they could buy them cheaper then). Others avoid certain industries because the dislike the product, or the underlying ethic and morality [life insurance, for example, pays only when people die .. ugh! and casket makers must be ghouls! -- at least some people think so.]

So why do shares go up and down? Or up and up? or down and even farther down?

In the end, it comes down to the players being different and having different psychologies. What price movement does is measure the relative sentiment about the company's future -- of course, crowds have been all wrong before and will be again!!

The good news in the stock markets [as opposed to politics, for example] is that people have to back their opinions with cash instead of just gales of hot air.

does this help?

it means that, if the demand is more than the available supply, the stock price increase; vice versa.

but if you ask, what affecting the demand and supply? well, no exact answer for that. perception that drive market sentiment, or ultimately drive the stock price.

however, it would be easier if you ask yourself, what makes you buy/sell the stock? good news, CEO resign, losing market share ect is just an obvious example rite?

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