Saturday, February 3, 2007

Why do stock prices fluctuate so much?

Stock prices fluctuate because they are determined purely by supply and demand.

For any stock, you will always have a large number of buyers and sellers.

Depending on the expectations and mood of these buyers and sellers, sometimes the demand for shares from buyers is stronger than the supply of shares from sellers, resulting in a price rise.
Similarly, if the supply from sellers exceeds the demand from buyers;prices will fall.

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