So how do traders and investment firms predict which stocks will pay off big? How do they know when to buy and sell?
The simple fact is there is no simple way to predict the behavior stock market. A number of factors cause rises and falls in share prices through gradual change or sharp spikes. The best way to understand how the stock market fluctuates is to study trends of individual stocks and broad market behaviors.
I’ve created this infographic to help you better understand the behavior of the stock market.
Click on the image below for a larger view.
Factors that affect stock prices include: inflation, interest rates, energy prices, oil prices and international issues like war, crime, fraud and political unrest.
Spikes in price are extremely difficult to predict but based on history, the stock market always rises over time and investors can make estimations of how the market will react to different influences and events. Recognizing a trend, hopefully before the curve, in an individual stock or the broader market will help you determine the best times to buy and sell. However, over time, research shows that investing in strong companies with growth potential pays off more than rumors and guesswork!