Understanding Current Stock Prices
Have you ever thought about investing in the stock market
? Does the whole complexity make you a little nervous. You are certainly not alone. Many people don't understand why current stock prices are where they are or why they fluctuate so frequently. In order to understand why, you'll need to understand supply and demand.
Supply and demand is rather simple. The more people that buy interest in a company than sell it will cause the price to go up. When more people sell their shares rather than buy it, the price will go down. Supply and demand is one of the underlying reasons for these prices.
One of the reasons why people buy and sell shares in a company is due the most current news or forecasts about the company. If news is good, the price will go up as more people purchase shares. If the news isn't good, then it will go down as more people sell their shares. Another important influence on stock prices are the earnings reports, which are released every quarter, or every three months. If a company has shown a profit, in most cases, the price will go up. If the earnings are there but not as good as expected, then the price will fall.
One thing to remember is not to compare one company to another. While it may seem like a good idea to compare two similar restaurant chains, for example, when it comes to current stock prices, they will be affected by how much the company is worth. To get this number, or market capitalization, you multiply the number of outstanding shares by the price per share. While each company may have a current share cost of $50, the number of outstanding shares could vary by millions. Just because one company has a lower price does not mean it is worth more than a company with a higher cost per share.
If you would like to learn more about the market, then consider taking one of the many online courses in how to buy and sell, what affects each company's worth, and all of the other important factors. While you can't rely on a graph or chart to completely predict which company you should invest in, it's a good idea to make sure and do some research ahead of time. You may be surprised at what information you can find. However, don't overlook the value of an investment broker, either.
by: Steven Magill
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