Stock prices and understanding how they work

Stock prices show the actual value that the stock of any given company is showing at any time. Prices tend to change on a daily basis, and the truth is that the value is, even more, fluid than that as the price will change throughout the day while the markets are open, though the price at market close will stay that way until the markets open.

Stock prices

Stock prices factors 

Stock prices vary based on a wide variety of issues. How is the company performing? What have their recent profit reports looked like? Are they expanding or contracting? These are specific questions that can directly affect prices, but there are also larger market factors that can influence most prices even if they're not directly tied into how one company is performing. This could be overall unemployment report for the country, the overall health or trend of the indexes, or interest rate announcements from the Fed.

Stock prices deal with a lot of variables, and it's possible for a company to be making money and losing stock value because they're under performing compared to expectations while a company that has lost money multiple quarters, but is growing and losing less money than expected, can actually gain stock value.

At first glance, this seems really strange compared to how general judgment of business works, but that's part of understanding the stock market and how it works in relation to the value of a company's stock. 

Other potential prices of stock issues

Other potential issues include things like dividends and stock splits. Dividends can attract long-term investment, and once stockholders are used to that, then the amount of the dividend and whether it is going up or down can also effect the value of every other single piece of company stock.

Stock splits are extremely popular with individuals who have retirement accounts set up. This doubles the sheer amount of stock that is owned and while it will drop the price of each share dramatically, in the beginning, overtime these shares will regain value as long as the company is doing well which shows how retirement accounts can jump in value, especially over large amounts of time.

The prices of stocks are affected by a wide variety of factors, however in general if a company is doing well over a long period of time its stock prices value will be good even during slow economic times.


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