Supply and Demand - A Stock Answer

You already know what drives the stock market (and the supermarket) -- supply and demand.

But have you ever wondered why a stock you own comes out with fantastic earnings, then drops down in price the following day? Or why a stock you own has terrible earnings, but goes up in price and makes a huge run over the next few months? Did you ever wonder why the analysts from the big name brokerage firms keep recommending a particular stock and it keeps going down in price? Admit it! You've wondered about these things.

The answer is, once again, supply and demand. It is the reason a company's value goes up and down. There is no other reason. If there are 10 people willing to purchase a particular stock at a certain price, but there are only 2 people selling that stock at a certain price, since demand outweighs supply, the price of the stock goes up. It's that simple.

And who determines supply and demand? Give it a guess and stay tuned. Portfolio Bunny will be back in a flash with the answer.