The price of stock may seem like a random figure to the uninitiated, but there is a reason for every fluctuation that happens to a stock's price, no matter how large or small.
In fact, the stock market is really capitalism in its purest form, as the prices are directly decided by how much (or how little) interest a stock is receiving from investors.
What determines the price of stock? Investors do! But there is a little bit more to it than just how many people are buying (or selling) the stock itself.
Of course the price is "set" according to changes in activity regarding a specific stock, but the reasons for these changes can vary quite a bit.
Something as simple as a new product line being announced can result in a huge increase in sales for a particular company's stock.
At the same time, if there is news that a product is not doing so well, or that recalls are being initiated, many people may decide to sell their shares to avoid losing money on their investments.
However, despite the reasons behind why people decide to buy stock, sell stock, or hold on to their investments, the fact still remains that the investors truly determine what the prices of stocks will be.
If a stock is not selling at $45, it will drop in price.
If a stock is $23 and people think that is a great price, then the value will rise until the amount of interest in the stock tapers off, at which point the stock's price will level.
In that way, the price of stock is determined by everyone who invests on the market.
Even a lack of interest from investors towards a stock can affect its price.
Now that you know what goes into the price of stock, it is up to you to use that knowledge as part of becoming a smart investor.
There is a lot of money to be made on the stock market, if you are a savvy investor.
By knowing what may or may not affect the price of stock (and in what way), you will be ahead of the game.