The rise and fall of share prices has an impact on our lives even if we don't own any shares. If your parents have a private or company pension it is more than likely invested in the stock market.
If the value of shares goes up the pension will be worth more and if the shares go down the pension will be worth less.
Understanding a little about the rise and fall of shares may help you make important financial decisions later in life.
It is clear to see when a company performs well their shares go up and when they under perform their shares go down. This simple rule generally holds true but there can be times when the shares move in a way that goes against expectations.
When a company reports low profits investors may buy the shares because they hope things will improve. This will force the share price to rise despite the report of low profits being bad news.
If a company is doing very well and has a very high share price investors only stand to lose money if they invest so the share price may fall.
These two examples demonstrate how important long term performance expectations are to the value of shares.
Why not take a look at some of the company performance charts on Junior Trader and see how much share prices have moved in the last year?
Share price changes are often very gradual but certain events can trigger huge rises or falls. If you find a company with a dramatic share price change try investigating a little further to see what caused this.
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