Stock Market?

[Wilma]

All right, all you really intelligent people, tell me what makes the stock market go up and down.  If it is what I think it is,  I will have another question.

[Diane Amberg]

I was waiting for someone with more knowledge than I to answer this, but since nobody nibbled, I'll try.  If I find a company that I like, has no debt, perhaps pays a nice dividend and seems to have a good future, I would buy a share at an offered price, or put in a bid and wait until the price arrives at what I am willing to pay for the number of shares I want. Share prices move up and down many times each day. If the company introduces a neat new product or does something to make the stock more valuable, people may be willing to pay more than I did to get some shares and the price would rise.(If I sell it then, at more than I paid, I make a profit.)  If this happens at a lot of companies, the stock market goes up. If something bad happens or people want to take their money out, they may be offered less. If you suddenly are offered less than you paid, you lose money if you sell it then. If that is happening at a lot of companies, the stock market drops. That is very over simplified, but is sort of how it works. 

[Roma Jean Turner]

Thanks Diane, simplified is what I need.

[Tobina+1]

I think Diane gave a very good example of how the stock market is supposed to work, and how it was designed to work.
Unfortunately, in today's market, I think the market is less affected by how the company is doing and what products it's putting out, and more on "speculators".  These are people who are guessing at what they think the company will do in the future.  They run analysis graphs and charts over time and presume to guess how they think the company will be affected by certain non-market related issues... government, disasters, foreign affairs, etc.  A company may be doing very well, selling products, coming out with new innovative products... but if the speculators think that based on past performance of other new companies failing and they determine this company is bound to fail, too, then their stocks may decrease.  Or they think that a car bomb going off in the Middle-East will affect how people buy this product, the stocks may decrease.  These are people in the "game" to make a fast buck and not in it for the long haul of a company. 
I think that Frank had some good posts in the "Better Fill up Today" thread back in the fall about how speculators was causing oil/gas prices to go up so much, even though oil companies were producing more fuel than they ever had.

[Flintauqua]

Speculators thrive on volatility.  If the markets aren't moving up or down, they can't make any money.  Yes, I said up and DOWN.  Way to complicated to explain, or for the average investor to understand, are instruments like puts, calls, options, short-sells, etc. that when executed correctly allow traders to make money even when an individual stock, or stock index is falling. 

[srkruzich]

All right, all you really intelligent people, tell me what makes the stock market go up and down.  If it is what I think it is,  I will have another question.

Basically selling and buying.   
Right now folks are selling off and hiding their money. 

[Diane Amberg]

All that is why I gave such a simple answer. When you are just learning, futures, puts, takes, day trading, etc. can make your eyes glaze over!