Stock Market Basics: how stock prices work
If you're new to investing, this page explains what stocks are, why prices move, and how to think like a long-term investor.
What a stock represents
A stock is ownership in a business. Over the long run, investors are paid through earnings growth, cash flow, dividends, and buybacks.
See what compounding does
The reason time in the market matters more than timing it. Change the years and watch how much of the final figure is growth rather than money you put in.
Ends up as
$108,224
You put in
$49,000
Growth
$59,224
55% of the final total.
What moves stock prices
- Earnings: higher profits usually support higher prices.
- Interest rates: higher rates can compress valuation multiples.
- News + sentiment: short-term volatility is often emotional.
- Valuation: price vs intrinsic value matters for long-term returns.
Next step: learn intrinsic value
Intrinsic value helps you decide whether a stock price is cheap or expensive relative to fundamentals.
Intrinsic Investor is for education and research only. Not financial advice.