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What is the Stock Market?

The stock market is a complicated international trading system where investors purchase shares of publicly traded companies. When buying stocks, exactly how much you win or lose will be determined by how the perceived value of the company you invest in increases or decreases going forward. One of the most attractive things about buying stocks is the way in which it is extremely rare to lose your entire investment amount, unless the company you invest in goes bankrupt.

The entire stock market is comprised of millions of investors on a global basis who have entirely the opposite ideas with regard to the value of the respective publicly traded companies. In order for any stock to be sold, there naturally needs to be a willing investor to buy it. As an adversarial system, it is the very nature of the stock market that with each decision made, one of the investors will win and the other will lose. As it is impossible for both to be correct in their predictions, it is also impossible for them to both come out on top.

What Makes Stock Prices Go Up and Down?

Stock prices rise and fall for a wide variety of reasons, including anything from supply and demand to political unrest to natural disasters to the opinions of investors with strong reputations to what is reported in the media to public opinion and so on. Any combination of these factors will create an instance where investors may find themselves scrambling to buy low or sell high. When there are more buyers than sellers, the price of any given stock has a tendency to rise. By contrast, when there are more sellers than buyers, the price of the respective stock is likely to fall.

Why is the Stock Market so Difficult to Predict?

The key to succeeding as a stock market investor lies in knowing exactly when to get out if you are already in, or when to get in if you are currently sitting on the side-lines. Given the fact that there are so many variables which can in their own right and in conjunction with one another influence stock prices at any time, this is precisely what makes the stock market incredibly difficult to predict. There’s a great deal of future foresight involved, along with keeping a relentlessly close eye on absolutely everything that may have an impact on the stocks you are interested in. Suffice to say, those that invest in an extensive portfolio of stocks have their work cut out in keeping track of things and ensuring they make the right moves.