What makes a stock price rise?

john.griffiths1 said: "Surely the foundation, the wholy grail, the defining principle of stock trading. So i thought what the heck, might as well ask some other people what they thought it was, so here I am asking. But, never to be greedy, here is my theroy. I am only 17 years old, so its pretty simplistic. I do study business studies and economics though, (fat lot of good they are mind!) so feel free to improve it, rip it apart, tell me im an idiot or whatever else you think, as long as it ends in something slightly constructive! I will keep editing this post when people make a good point, may even set up a blog if i get enough interest. Thanks and pick away people! Stock prices rise when profits rise. Profits rise when more products are sold or the cost of producing thouse products decreases. More products are sold if the PLC gets more or bigger orders or more orders. Costs go down when less money is spent on any factor in the IPO model (Input, processing, output) For instance, costs would go down in I if the PLC changes to a cheaper supplier, but quality and thus customer base & sales remain the same. P could be cheaper if less money was spent on either the labour (redundancys) or asset (selling off some excess machinery or factories)capital of the PLC. And O costs could be reduced by cheaper warehousing and or cheaper distribution of the goods. Other factors include: Government intervention in reducing or increasing the costs of particular industries. How fast will the share prices rise? We dont want to have capital tied up in shares that are going to take years to profitalise. Thats it. Simple as that. Anything ive missed? Anythoughts on how i could monitor all these factors of all the PLC's in a FTSE 100? Reply or PM me! Thanks in advance."

nemke said: "Sorry kid but you need to do some more research. You have the general idea, but again a very general idea of how it works. I suggest you read some basic accounting books, then management, then start with investing books. After you read a few of the intro books on these topics i suggest picking up the Intelligent Investor by Benjamin Graham. Start there and continue studying about investing and general business. Good luck to you"

HappyHarry said: "Earnings matters, but there's something else that's a big factor: how fast the earnings grow. Check out the P/E/G ratio of stocks to find growers."

john.griffiths1 said: "What the dickens are P/E/G ratios?"

sp0om said: "Investopedia.com will have almost any definition you are looking for. You might have better luck searching for "PEG ratios" instead of "P/E/G ratios"."

alhamid said: "[quote] A stock's P/E ratio divided by the annual growth rate of its company's earnings. A popular rule of thumb in picking growth stocks is to consider a stock underpriced if its PEG falls much below 1, and overpriced if the PEG is much greater than 1. [/quote] heres the definition of price to earnings growth"

john.griffiths1 said: "So all we have worked out from here is to consider PEG. Anything else? How do we go about starting to measure the factors affecting stock growth?"

nemke said: "You're not gonna learn how to analyze stocks from one forum topic... I suggest you start reading some books on the topic and if you have some more specific questions come back and ask!"

marketMakersDream said: "Greed is the primary reason when there is a rise in a stocks price. And then when the price is falling,it is caused by fear.So all the books about trading and investing in the markets are just the human psyche trying to convert these 2 opposites in to cognitiv thinkable matter. :confused:"

HappyHarry said: "That's definitely how Jesse Livermore thought. He was sure that every action on the stock market was repeatable, because of human nature. People act in patterns that are expressed numerically."

alhamid said: "don't fear when you should be greedy and don't be greedy when you should be afraid."