I just don’t understand how it works…when I hold shares in a company and I spend money there, am I technically making a very very small amount of that money back?
ALSO:
what is the simplest way to explain how stock prices increase then?
In: Economics
There is no simple answer as to what determines stock price. Yes supply and demand is one thing but it’s not everything. The fundamentals are also important, that is the actual bottom line of the company, how much they’re making, how much they’re spending, how much they’re borrowing. A huge part of it however has to do with speculation and investor sentiments, which are intangible things. Based on their earnings reports and guidance, how do investors feel about the near future outlook of the company. Did the CEO tweet anything, are they under investigation or have pending litigation against them, do professional analysts feel they’ll go up or down, do average retail traders feel one way or another. All those things play a role and it’s impossible to predict it fully.
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