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Get Started in Shares by Glen Arnold

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chapter 9

What drives share prices?

You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.

Peter Lynch

The glib answer to the question of what drives or moves share prices is the weight of supply versus the weight of demand. If large numbers of shareholders are supplying shares to be sold in the stock market while few are demanding shares, then the price will fall. However, we’ll need to dig deeper to uncover the factors that lead to increases or decreases in the supply of shares for sale, or to changes in demand.

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