Stock market prices nowadays summon up the image of smalltime and mid-range investors reeling around in abject confusion, some with briefcases full of money they've no idea what to do with in terms of investments. And while we can easily picture a steady stream of successful traders depositing their earnings from biotech industries, gold, oil, and military hardware, everything else is sort of murky.
How are stock market prices arrived at? Who determines what they are going to be? The company issuing the stock does not participate in any profits or losses resulting from these stock transactions because the company has no vested monetary interest. This is what confuses many people. The setting of stock prices depends on many factors.
Disparate matters such as political and economic and even weather-related events influence stock market prices, as do the number of buyers and sellers on the market. One thing to bear in mind is that the price of the stock depends on the willingness of investors to purchase it, as well as the amount they are ready to pay for it. A certain stock price may seem too high for one investor, whereas for others it may seem if not an actual bargain, at least a reasonable bet. It all depends on the subjective view and judgment of the investor.
It is conceivable that a stock might attract 100 buyers for 100 shares at $100 each. It's equally conceivable that the same stock might, the following week, attract 200 buyers for 100 shares at $200 each. And the third week attract no buyers whatever for shares listing at $1.50 each. That's far-fetched, but possible.
A reasonably prudent investor evaluates the condition of a company before setting out to sell its stock when the price is down. Some even take advantage of the falling price and add more of that stock to their holdings. Those are investors who wisely don't let market insecurity influence their decisions regarding the dependability of the company in question. The price might be down solely because a top executive is leaving the company. Chances are, however, her replacement will be just as effective at helping run the company successfully.
When you've gained some experience at trading, some knowledge of what lies behind stock market prices, you'll find you've become much more proficient at determining the "right price" for a stock. It won't necessarily be what you want to pay for it, but you'll know it's the correct price for that time.