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Investing Online For Dummies, 7th Edition by Matt Krantz

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Chapter 6. Why Stock Prices Rise and Fall

In This Chapter

  • Finding out how a company becomes a stock

  • Digging for online data that might affect a stock's price

  • Finding academic studies online and profiting from them

  • Reading quarterly earnings statements online

  • Getting a handle on economic data

  • Gaining insights from long-term successful investors

Investors often wonder why bad things can happen to shares of "good companies." It's common for a company to report seemingly solid news, like sharply higher profit, and its stock will fall anyway. It doesn't seem right to many investors. This chapter answers the burning question you and many investors might have: "Why do stocks rise and fall?" It's a two-part answer because one set of forces causes stocks to move in the short term, and another set influences stock prices in the long term. I explain what moves stocks and show you online tools that can help you track market-moving events.

How Stocks Get into the Public's Hands

If you've ever seen the screen of a stock trader's computer, on most days, it looks like a Christmas tree. Ticker symbols are flashing red and green, indicating that stock prices are moving up and down during the day. But why are the stocks moving up and down so much? To understand that, it's helpful to see how and why companies decide to sell stock to the public, allowing you to become an online investor. The following sections take a look at how the process works.

Step 1: An idea becomes a company

Clever entrepreneurs with an ...

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