Exploring the Diverse World of Shares
Share prices are largely
determined by the forces of supply and demand. A company that exhibits potential long-term earnings may attract more investors to buy their shares, thereby having an increase in share prices. A company with a bearish outlook, on the other hand, may entice more sellers than buyers, which can result in downward pressure on their prices.
Other factors can cause
price volatility and cause sudden or brief changes in price. Some examples of this include political events, financial reports and economic news. However, not all news or reports affect all securities. For example, the stocks of companies engaged in the automobile industry, may suffer from a lack of inventory to meet buyers demand and/or a price increase in steel, which will cause an unexpected increase in the production costs.
Stock prices can also be
driven by what is known as herd behaviour, which is the tendency for people to copycat the action of a larger group.