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Stock prices are determined at the marketplace. However, just like you stated, there is not a clean connection that tells us exactly how a stock price will go up or down. However, three are three main category of forces that impacts stock prices. Those are fundamental factors, technical factors, and market sentiment. fundamental factors, at a very basic ...


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In short...human nature! (I'm only half-kidding). Of course, mechanically, what drives these abrupt changes is simply a large amount of buyers one day...and a large amount of sellers the next. A great metaphor you might like is Mr. Market. Also this video of Warren Buffett talking about Mr Market. It's just a metaphor used to show how capricious, and ...


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There’s quite a few pieces to the answer. The first thing to keep in mind is that the prospects for the economy also drive beliefs about business profitability, as well as the willingness of investors to take risks. This means that expected weakness in the economy normally translates into lower stock prices. As a result, people can use the stock market as a ...


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Companies don’t issue stocks once and for all. It’s one of their sources of financing. Even if a majority of stocks is traded on secondary market companies still routinely issue new stocks when they are in need of cash. Stock owners may feel less wealthy if the stock values fall and hence they might spend less or postpone their consumption. People who were ...


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Nothing stops the stock exchange from denominating equities in different currencies and settling trades in different currencies. Real-life example The Singapore Exchange lists equities denominated in different currencies, including Singapore dollars (SGD), US dollars (USD), Hong Kong dollars (HKD), Renminbi (CNY), Japanese Yen (JPY), Euros (EUR), ...


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that is a really good question. One nuance to your answer might be found in this video. Basically, Ben Bernanke once defended the Fed's QE Program by saying, "What we did was Qualitative Easing, not Quantitative Easing." The Fed made a specific effort to buy securities like MBS after 2008. In a true QE Regime, the Fed would buy comic books if they could - ...


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sub1: When it is said there is an asset price bubble, it usually means stock prices (or RE). I wonder if the assets that actually are on companies balance sheets are also inflated? They are, banks for example hold so called Tier2 and Tier3 assets on their balance sheets that are essentially equity or debt of other companies. In a March 12th type of ...


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The Fed can not buy stock. However a negative yield on bonds will forced investors to buy index/etf that pays huge dividend. In effect the Fed can invest in equity or stock. Central bank of China and Japan had done the above in the past.


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Actually you are asking little bit different question in your title and then in your question. There is difference between asking why stock market always grows and why individual companies’ stock grow. In fact in case of individual companies you can see that many companies fail and their stock price gets wiped out despite the stock market always growing over ...


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You are right that the stock price affects directly the shareholders. In contrast, the managers of a company (the CEO, etc) are not necessarily affected by the stock price. However, their actions have a very important impact on the stock price. The conflict of interest between the shareholders and the managers of a company is the classic problem of "...


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You probably want to isolate the effect of inflation. So consider a bond, a common stock and a preferred stock that have the same price today but there is inflation. That is, you expect prices to increase. Given this scenario, which of these three assets should you invest on?


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