Stock Market Share Prices Rise Beautifully, But Fall Dramatically- Why?

It would be real easy if share prices just carried on rising, oh what a sweet time it would be, but I am sure investors would have no interest in the industry if this was the case, they would simply throw as much money in as they could and walk away, knowing that their investment would continually increase without any intervention at all!

But what makes stock market trading so appealing, is the chase! Not knowing if your investment is going to rise or fall, trying to determine what is going to happen and ultimately discovering if you were right or wrong.

So, what actually makes the stock and shares rise and fall?

The obvious reason is the share price will go up if more people want to buy than sell and the share price will fall if more people want to sell than buy.

More people want to buy if a particular companies earnings are high, people want to sell if the earnings are low. This is the most obvious area to look at for investors.

But when you look deeper into why more people buy or sell, is when things can get a little complicated and far reaching. Something (unrelated to chocolate) that happens in another country can cause the price of chocolate to rise on the other side of the world!

I would be here all day if I listed everything that can cause a rise or fall in share prices, but here are a few. Public opinion, inflation, interest rates, fuel prices, food prices, war, weather, etc.

We could go on and on, this is why there are people who study the world economies and what is going on across the planet, if they can predict what’s going to happen early, then they can make some very clever investment decisions.

The butterfly effect really comes into play here, an event happening somewhere can have huge results thousands of miles away and indeed all over the world, an example of this is war.

So let’s look at the terrible thing that is war! Nearly everywhere is looking good, economies are thriving and steadily growing, then suddenly a war breaks out, it just so happens that where the war breaks out, is where the world gets most of its oil, suddenly people, cannot access the oil, so the oil companies increase the price on the oil that they do have in stock, (although the main increase in the crude oil prices is the explosive development of the United States of America, India and China).

A spike in oil prices will increase fuel prices, car prices, clothing, food and many more. This will then push inflation upwards, next come an interest rate rise! This presses the government to raise interest rates and we have the example above all over again.

So, stock market share prices are affected by many factors that are hard to predict. But if you study the markets closely, you can start to pick out the trends and start to understand when and where to invest.

There are many other elements that come into play, like foreign currency rates, but hopefully this article will give you a quick overview of what causes the stock market share prices to rise and fall.

When looking to learn stock market share prices, continual study is needed, there are shortcuts which involve automation, but ones education in this industry is SO important.

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