Why Do Stock Prices Go Up and Down? These are the 3 determining factors!

Have you ever noticed how stock prices keep changing all the time? This movement is not just a coincidence, but is influenced by three main factors: macroeconomic conditions, company fundamentals, and market sentiment. Macroeconomic factors such as inflation, interest rates and economic growth (GDP) greatly influence investor confidence. When the economy is good, companies grow, and stock prices tend to rise. On the other hand, when there is uncertainty such as a recession or a spike in inflation, investors become more cautious, which can cause share prices to decline.

Furthermore, company fundamental factors also play an important role. Companies with good financial performance, solid management, and competitive advantages will be more attractive to investors, driving their share prices higher. Conversely, if a company experiences financial difficulties, has large debts, or fails to compete in the market, its share price can experience pressure. Therefore, long-term investors often conduct an in-depth analysis of a company's fundamentals before making an investment decision.

Finally, market sentiment is an equally important factor in stock price movements. Sometimes, stock prices fluctuate not because of company performance, but rather due to investors' emotional reactions to news, industry trends, or even the influence of social media. This often leads to high market volatility. By understanding that stock prices are influenced by a combination of economic conditions, business strength and investor psychology, one can be wiser in making investment decisions in the stock market.

Money Vibes video eps 5: Why do stock prices go up and down? These are the 3 determining factors!