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What Makes The Stock Market Go Up And Down?

Mr. C.S. Sudheer | Posted On Saturday, June 21,2008, 10:03 AM

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What Makes The Stock Market Go Up And Down?



My dear readers, I discussed with you on certain money and economy related issues in my earlier articles. But, today’s topic is little interesting and of course very important to become a successful investor. We all invested on one or the thing either directly or indirectly. Our investments may be on our children, our dress, our properties, shares, stocks and obviously on ourselves.

I called expenditures for our children as an investment, because we are looking for great results, achievements and returns from our children. Then, investment on our cloths, yes I call it as an investment with a strong reason i.e. if you look good you can grab better opportunities in this competitive economy or else you will miss lot many things in your life. And, investing on properties, shares and stocks everything is with the expectation of making big returns.

But, these investments sometimes yield you good returns and sometimes may not. And of course, there are reasons behind all these. Today I would like to share with you certain reasons behind the ups and downs of stock market which sometimes yield you good returns and sometimes it may leave you bankrupt.

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See Also: Guide to the Stock Market for a First Timer​

The Core Reasons Are

Why Stocks Prices Go Up

  • The company entered in to a big new contract
  • A great positive news coverage on the company in the media
  • Scientists discovered and opined that the product is good for something important
  • A famous investor is buying shares-- Lots of people are buying shares
  • An analyst upgrades the company, changing her recommendation from, for instance, "buy" to "strong buy"
  • Other stocks in the same industry go up
  • Most of the stock market is up
  • A competitor's factory burns down
  • The company wins a lawsuit
  • More people are buying the product or service
  • The company expands globally, and starts selling in other countries
  • The industry is "hot"
  • people expect big things for good reasons
  • The industry is "hot"
  • people don't understand much about it, but they're buying anyway
  • Increasing sales and profits
  • A great new executive is hired to run the company
  • An exciting new product or service is introduced
  • The company is bought by another company
  • The company might be bought by another company
  • Additional exciting new products or services are expected
  • The company is going to "spin-off" part of itself as a new company
  • Rumours
  • For no reason at all

See Also: Stock Market In India

Why Stocks Prices Go Down

  • Lots of people are selling shares
  • A factory burns down
  • Other stocks in the same industry go down
  • Profits and/or sales are slipping
  • Top executives leave the company
  • A famous investor sells shares of the company
  • An analyst downgrades his recommendation of the stock, maybe from "buy" to "hold"
  • The company loses a major customer
  • Most of the stock market is down
  • perhaps in a temporary recession or bear market
  • Another company introduces a better product
  • There's a supply shortage, so not enough of the product can be made
  • A big lawsuit is filed against the company
  • Scientists discover the product is not safe
  • Fewer people are buying the product
  • The industry used to be "hot," but now another industry is more popular
  • Some new law might hurt sales or profits
  • A powerful company becomes a competitor
  • Rumours
  • For no reason at all

See Also: All You Need To Know : How Stock Markets Function?

These are the some reasons which creates wave in the market both for and against the company in different situations. But, an intelligent investor has to look at all these fundamentals before taking any reasons regarding buying and selling of shares and stocks of any companies. Now, I would like to add up one more thing that some of these reasons harm short term oriented investors and some time they harm both. Therefore, an investor with long term vision and patience will always make the most out of any stock market or any stocks. As a financial consultant, my advice is, if you really want to take part in the development of India, be regular in the long run.

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