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Here are some basic facts about stock price movement:

• At the most fundamental level, supply and demand in the market determine stock price.
• Price times the number of shares outstanding (market capitalization) is the value of a company. Comparing just the share price of two companies is meaningless.
• Theoretically earnings are what affect investors' valuation of a company, but there are other indicators that investors use to predict stock price. Remember, it is investors' sentiments, attitudes, and expectations that ultimately affect stock prices.
• There are many theories that try to explain the way stock prices move the way they do. Unfortunately, there is no one theory that can explain everything

 

 

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