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You are Here : Home > Investor Education > The Stock Market

Investing in the stock market

Stock Pricing

Many people are still confused about the pricing of stocks and the movements of prices when they read through the list of stock prices in the newspapers. There is a wide variety of stock prices and there are many people who kept on wondering why some well-known companies are being traded for relatively low prices while some lesser known companies are being traded for excessively high prices.

Stock prices, to a certain extent, are determined by the confidence of an investor that is based on either a real or a perceived performance. The financial status of companies is reported on a quarterly basis when their cash flow, sales, and earnings are disclosed. The worth of a company is based on its financial status but it can be overrode or undermined by the speculation of the investors.

Rumors spreading in the stock market usually affect the fate of the stocks. For example, an ongoing rumor stating that a particular company is planning to make a strategic move will cause investors to come flocking just to buy stocks from that company. The principle of supply and demand applies in the stock market. A sudden upsurge in the interest of investors will cause the stock prices to rise while a fear among investors will cause the prices to plummet. The worth and the performance of a company are still considered to be the biggest factors in the determination of stock prices.

Stock prices can be found in the daily market summaries of newspapers or online sources. Your stockbroker will also provide quotes which can be accessed either via the Internet or via a telephone.