Understanding Influences on the Stock Market

influences on the stock market

Hello folks! Hope you’re doing well. Having a sound investing strategy is imperative to reaching early retirement. While I Invest to Win via a mix of primarily stock index funds, others use real estate investing, being a dividend investor, a stock picker / trader, a small business owner (this has now become part of my strategy as well) or other means.

With that, I introduce Katherine with a contributed post to discuss some factors that affect the stock market for stock pickers.

Understanding Influences on the Stock Market

Before you jump right into investing, you have to know what makes the stock market rise and slump. Yes, you know that the performance of the company has a big impact on what its stock price will do, but there are dozens of other things that can influence what you pay or what you will get when you buy or sell stocks. Knowing these influences will help you to make better investing choices, as well as to better identify when it’s time to cut your losses and move on.

Here are just a few of the things that can influence performance in the stock market:

Public Opinion

Public opinion has a big impact on how well a company performs and, therefore, how well its stock does. Look at what’s happening to the Trump brand right now. As the President behaves more and more erratically, people are shunning any products with the Trump name on them in protest. Several stores pulled Ivanka Trump’s clothing and accessory lines from their shelves, and that hurt her company’s sales and stock.

This influence can work in the positive direction also. The GoPro has exploded onto the scene thanks to such popular opinions of it and its inclusion in multiple devices. The GoPro stock price has had its ups and downs like any stock, but when it initially launched it had a strong positive response. The rallying cry behind GoPro has now waned, so what’s next for this Company?

Staying aware of the public opinion can help you make informed decisions about your investments.

Supply and Demandinfluences on the stock market

Supply and demand always has a big influence on price. The more a company has of a product and the less demand there is for it, the lower the stock price will be. Conversely, the less a company has of a product and the more the demand, the higher the stock price will be. Buying a stock during the higher supply phase and selling it during the low supply-high demand phase can net you a nice gain.

The obvious examples here are the hot Christmas toys. If you had bought stock in Spin Master, the company that makes Hatchimals, last fall, you could have made a lot of money if you had sold that stock around Christmas when the toy was nearly impossible to buy but everyone wanted it. Reading about industry news and the latest investment trends can keep you informed about the opportunities.

The Economy

The economy can change quickly, and it has a major impact on how much people spend and what kind of profits the company makes. The price of raw goods could go up, and that can cut into profits, bringing down a company’s stock. Unemployment can rise, which will reduce consumer spending power and lower company sales. That will bring down the company stock.

Currency fluctuations, GDP, consumer confidence, and many other factors can also influence the company stock price. You need to educate yourself about these issues and read the news regularly to know what’s happening. Changes can happen literally overnight, and you need to have been following the situation over time to be able to make informed decisions quickly.

Company News

A company might announce that it is introducing an exciting new product, and the stock shoots up. Or a company might announce that it has just fired its CEO because he was discovered selling company secrets, and the stock plummets. It is important that you follow news about any company for which you own stock closely. Again, things can change quickly, and you must be prepared to act.

How company news will affect stock prices is not always obvious. You may need to read other news or expert opinions about what’s going on before you can make the right decision. The important thing is to remain aware of what’s happening with the company so that you can get the information you need to make a decision quickly.

Investing in the stock market can help you meet your financial goals if you make some smart choices. One way to be sure that you are investing wisely is to educate yourself as much as possible, and knowing what factors will influence the market is one of the best places to start. Keep the right resources close at hand, and you will always have the information you need.


Are you a stock picker or day trader? What other factors do you look out for and make sure to closely monitor?

– Katherine



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  1. There are indeed all these factors. Right now, I prefer to go the buy them all route via indexes. With options, I try to profit some temporary slumps on stock I would not mind to own in my DGI portfolio.

    1. Buying them all has been my philosophy as well. Haven’t gotten into option trading myself, but I’ve enjoyed reading extensively about the various strategies. Maybe one day.

  2. I don’t pick individual stocks or try to day trade. There are just too many factors to consider and the market doesn’t always behave rationally because investors aren’t always rational people. For me, there’s just way too much time that goes into picking stocks. And on average, most day traders are likely to do worse overall than if they just picked up an S&P index fund.

    1. That’s been my philosophy more or less as well. Even the so called professionals have more bad years than good ones. Thanks for stopping by, GFY!

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