Why Do Share Prices Go Up and Down?

Like any product in a market, a share is worth what people in that market are prepared to pay for it.

Market forces will dictate the way a share price moves.
For instance, suppose a company improves its market position; its profits will increase and usually its dividend. Because a share has increased its dividend, it becomes more sought after and the share price will increase.

A growth company may not issue a dividend but plough all of its increased profits back into the company for reinvestment or expansion. In this case the share price will also increase because the total assets of the company and hence its future profits will have risen.

Traders in shares will always try to anticipate the worth of a company by factoring in all streams of financial information.




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