Change moves markets forward as it is constant in stock markets. Investors aware of the forces that drive change in supply and demand have a better understanding of markets and investments. This lesson discusses how change moves markets forward and the mix of forces that power those changes. Understanding those changes presents investors with opportunities, 3 big investment choices, and many options to use change to plan, grow and manage their wealth-building.
What you learn from the lesson
Change moves markets forward:
Change moves markets forward is a lesson that explains the forces that drive markets and the opportunities this creates for investors. Investors can use this knowledge to improve investment results. In addition, links at the end of the lesson access more related content. The lesson includes:
FAQ about
Change moves markets forward
The following FAQ and answers about what moves markets help investors learn about the forces of change in stock markets. Some answers overlap and provide context within those related topics. As a result, investors can see how each answer fits into the broader investment picture.
Should I buy a stock when it's going up?
Investors want stocks to rise in price, recognizing a rising market as a promising investment opportunity. Forget about timing the market, but invest without hesitation when companies and the economy grow and markets rise.
Market forces of supply and demand drive stock prices. So, while picking the low is impossible, rising markets are for investors less concerned about timing a trade because markets show consistent long-term growth.
Consequently, purchasing well-performing stocks can mean buying them at steadily higher prices as part of an established money-making strategy. But wealth-building investors always do their homework to avoid traps like buying channel-bound stocks at the top.
How does change affect markets?
Market forces are constantly at play which makes change the only constant. It happens because buyers and sellers as well as financial reports, interest rates, foreign exchange rates, current events, natural events, political decisions, comments, opinions, or true and false news all affect markets. Any change can affect the supply or demand for a stock. Consequently, yields, returns, and values can continually and instantly change. And any change can present opportunities or risks for buyers and sellers.
Do you want to buy stocks when they are high or low?
Traders believe in buying low and selling high. However, successful investors know that rising prices attract more buyers to drive even higher prices. Rather than selling high, they seek higher prices while collecting regularly increasing dividend income.As a result, high or low-priced stocks can be a good buy if they go higher. That makes good research and analysis essential to pick and manage the risk of a stock with the best odds of going up.
Rising stocks are most likely to continue rising higher. But not always, or forever. So, money-making investors can buy rising winners but quickly sell when they are wrong. They never make the wealth-damaging mistake of averaging down but sell losers and mistakes to move on.
What makes the market go up and down?
The forces of supply and demand drive markets. An increase in supply leads to a decrease in prices, while an increase in demand leads to a rise in prices.Several factors affect supply and demand, including market fundamentals and technicals. Fundamentals refer to changes in a company's revenue, earnings, growth, and risk, while technicals involve analyzing price and volume data to predict future trends and behaviors.
External factors, such as influencer or pundit statements or actions and international or environmental events, also impact markets.
Ultimately, investors' reactions to all or any of these factors drive markets.
Is now a good time to invest in stocks?
Ask White Top Investor: Is now a good time to invest in stocks?Buying now is suitable for long-term investors holding for five years or more. That is always the case, except in a sharp downturn. In that case, wait for the decline to reach the bottom and buy at those "sale prices"!
Then, as stock prices rise, keep buying. As well, investors that use dollar-cost averaging buy in all markets. Most markets present buying opportunities, especially for investors keeping their personal diversification needs in mind.
In contrast, short-term traders may attempt to time the market, but wise investors do not.
What really moves the markets?
Three forces impact buyer and seller decisions to drive price movements.First, each company's fundamentals, like revenues, earnings, or profits,
Second, technicals like momentum or price patterns displayed by charts,
Third, the tick-by-tick display of traders' and investors' feelings that algorithmic trading can magnify.
Those forces may interact or move independently. Sometimes seemingly with no logic, and can influence, impact, counter, or reflect one another or not!
But the market changes as buyer and seller decisions drive supply and demand displayed by price and volume. As a result, prices move a little or a lot in response to the pressure from each side.
Core content:
Change moves markets forward
Knowing and understanding the forces that power change in stock markets helps investors learn about markets and investing. That helps investors become comfortable with market movements. That comfort lets them see and understand more investment opportunities and better manage risks. As a result, they gain another superior investor skill.
Markets trade anything
Markets exist to trade every imaginable thing, idea, or service. They have been around forever. Or at least through all of advanced human history. Through that long history, there has been constant change. In fact, in markets, change is the only constant.
Trading things and parts of things including shares of companies was a natural progression in human social development. Most markets were local, and in practical terms, restricted by barriers to entry. Technology, knowledge and contacts gave access. The rich and powerful controlled who obtained access and how they could benefit from investments and opportunities.
The forces of change and market movements
Money and market forces cannot be restricted by wealth, or authority. Yes, they can be manipulated, but they are much more like gravity. We all have to deal with it! For some, that creates challenges and limits, for others, that means opportunities. In all cases, markets are about supply and demand.
Most often, for stock market investors it means wealth-building opportunities. To find and make the best use of those opportunities, it helps to understand the forces that move markets. There are market changes forces inside and outside markets.
Inside and outside forces move markets
The inside market forces include three broad categories: the fundamental facts, the technical movements, and the behavior of market players. Each can affect supply and demand, thus moving markets as well as impacting the other categories.
Outside forces that can change markets include virtually everything or every event outside the market. For practical purposes, news of government, international, or environmental events can make markets move. Decisions or comments of politicians, interest rates, foreign exchange rates, current events, economic reports, opinions or true or false news, move markets.
The mix of market forces can quickly become a confusing complex. And those factors are all interactive and interdependent with overlaps and blurry boundaries. But like enjoying an excellent cake, we can benefit from the result without understanding complex details of the mix or process. However, knowing some key ingredients does help us appreciate and better grasp the results.
Fundamental factors that move markets
When the fundamental facts of the market or listed companies change, markets move. Fundamental changes can have great market impact, and more so in the long-term. For fundamentals, it is the trend, up or down, rather than any absolute number that is positive or negative. Up or more is good, down or less is bad. Fundamental facts can include,
Libraries of books, herds of PhDs and an unending parade of analysts' study, examine, and express opinions on their fundamental analysis. But for most investors, bigger numbers are better, less or declining numbers are bad.
The fundamental numbers are extracted from financial statements. For investors, financial statements are a treasure trove of facts. Any investor developing a better understanding of the fundamentals, can become a better investor.
Get those benefits by learning to read financial statements. The basics are easy to learn and understand. It does not require a deep dive into the numbers to quickly pick out useful money-making information. Learning financial statement basics helps any investor develop better wealth-building skills.
Technical factors that move markets
Technical factors are different. This is the land of stock chart readers. Stock market geeks like me enjoy this stuff. However, most investors can pay little attention to it without harm.
For anyone interested, diving into and understanding technical analysis and stock chart reading takes some effort. For traders, that can be time well spent, but for most investors, staying with the very basics of chart reading is plenty.
For most investors, the important point to know about the technical factors and stock market charts is that they exist and can be useful to short-term traders.
Behavior factors that move markets
We humans are social creatures and do react to one another. Those behaviors and responses carry on in markets. Any change in fundamentals, technical or behavior of other market players, impacts us and all other investors.
Change of any sort frequently produces a quick reaction that shows in market movements. Thus, the tick by tick up and down gyrations of markets. Any time a number or expectation is met, exceeded, or missed, triggers a market response. That is normal human behavior. As well, many traders follow and act on technical readings of market charts. The final force that can drive numbers is the behavior of market players, traders and investors.
The balance or imbalance between buyers and sellers continues to change with no end of actions and reactions. Number of shares offered or wanted change order by order. Supplies can exceed or be short, there may be more sellers than buyers, prices change to entice buyers or sellers as needed. It is wrapped in the market sentiment or how people are feeling about markets. News, opinion, policy, or any change impacts markets. That has been the way of markets from the beginning.
Mutual funds,
the first big investment choice
We flash forward centuries to the investigation of mutual funds. That development went a long way to bring democracy to investing. At the time, the invention of mutual funds or pooling the capital or money of many investors, was revolutionary. It allowed small investors, many common citizens, to form funds or capital pools.
These pools of capital were large enough to buy significant positions in an enterprise or take portions of several different opportunities. For the first time in history this accomplished an amazing investing feat! It gave much broader access to many more investors and dramatically increased the total capital pool available for investing and economic development!
Mutual funds predate the American Declaration of Independence
Historically, inventing mutual funds was a very big deal! Astounding as it may seem, this innovation predates the American Declaration of Independence! The first mutual fund appeared in Holland in 1774!
Mutual funds democratized and popularized investing. They gave practical market access to many millions of small savers and investors. Now, assets under mutual fund management, total multiple trillions of dollars. Funds cover every imaginable investing and business angle of every nation, market, industry and economic sector. Mutual funds range from those that offer extremely broad market coverage to some of exceptionally narrow focus.
The greatest achievement of mutual funds was bringing many ordinary citizens into the world of investing. That wonderful achievement has been eclipsed by more current developments and modern financial instruments. Products developed in more recent times, take advantage of efficient digital technologies and avoid the huge cost of the now obsolete mutual fund structure.
When horses and sails were the latest in technology, mutual funds were revolutionary. The mutual fund sale, distribution, management and administration structure show this historic foundation. So do the high costs associated with mutual funds.
Mutual funds have an outdated structure, sales and service culture and high fees that all together renders an expensive and obsolete fund system. With the mutual fund management and administration structure, as well as a distribution system designed for a pre-electronic, let alone pre-digital age, mutual fund costs are far too high.
However, with managing trillions of dollars at stake, this powerful economic and financial force is not changing without a fight. Please see the links to other White Top Investor lessons on mutual funds.
Good changes for your wealth
The White Top Investor lessons, Investment Choice, discusses far more efficient and cost-effective ways to invest. If you own mutual funds, you will want the information in ETF Revolution Changes Investing History. Dramatic cost differences can considerably improve your net returns. Make the change to put much more money into your own pocket.
When computers arrived and the digital age unfolded, financial services underwent dramatic cost structure shake-ups. Paper driven financial industry players saw dramatic plunges in operating, administrative and sales costs.
In time, innovative discount brokers emerged to wage fierce cost-based, price wars for clients. Investors saw the cost of transactions fall from well over $100 a trade to, in one case, $0.01 per share. Now transaction fees under $10 are very common and free options exist. These low fees come with no service, advice or help. Investors wanting to take advantage of low fees need to know what they are doing.
It is well worth your while to learn how to invest for your own benefit. Learn it and do it. The significant differences go directly into your pocket.
Many new and non-investors are using WhiteTopInvestor.com to learn basic investing from this site dedicated to helping non-investors become knowledgeable, comfortable, confident investors on their way to mastering their own financial security and independence.
The cost driven evolution unfolding over decades, continues to revolutionize investing today. Over time, markets everywhere continue evolving towards becoming open to almost anyone, anywhere.
Lesson takeaway points for
Change moves markets forward
The lesson discussed the forces that drive markets and create investment opportunities.
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Change moves markets forward
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Wealth Growing Money Strategies:
Introduction: Wealth Growing Money Strategies Lesson 1
Investors use many stock market strategies Lesson 2
8 Big money matters Lesson 3
Nelson Mandela touched investors Lesson 4
Market time grows money Lesson 5
Stock market dip opportunities Lesson 6
Investing strategies taking profits Lesson 7
5 Money making strategies Lesson 8
Investors can deposit and WAIT! Lesson 9
Change moves markets forward Lesson 10
ETF Revolution changes investing Lesson 11
Benjamin Graham market mix Lesson 12
Next lesson 11
ETF Revolution changes investing. Exchange Traded Funds are popular investing choices first created in Canada but now in investing markets around the world.
Have a prosperous investor day!
Bryan
White Top Investor
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