Stock Markets

[coffers1]

Can someone explain how the FTSE 100 moves, who controls the movements and why do some shares go up in a bad market and down in a good market?

[AlanS107]

The market moves in two ways. Firstly, by random events and secondly by what is known of each company. The price of a share is controlled by supply and demand but basically it is arrived at by the thousands of expert analysts that study company statistics .

The price of a share is always correct at any given time based on what is known of the company. There is no such thing as a cheap share and an individual cannot outguess the combined weight of the experts.

Unless you have inside knowledge of a company that nobody else has (this is illegal) or you can foresee future random events, any share buying is a gamble. However, over a lengthy period of time (5-10 years), it has generally been the case that share prices will beat inflation. But be warned, it is a risk and you can lose all your money.

Shares that go up or down against the basic movement of the market is caused by good or bad news being found out or announced by the company. Latest rules stipulate that a company must make known any factor that will affect the share price as soon as they know it. This gives everybody a much fairer chance of reacting to the news.

[Hammer]

The FTSE100 can be thought of as a mixed basket of some shares from all of the biggest 100 companies in the UK. If 'the market' goes up, the value of the basket goes up. If 'the market' goes down, the basket goes down.

The movements are controlled by market forces - if in general more people want to buy shares than sell them, prices go up, if there are more sellers than buyers, prices go down.

[Andy008]

Market efficiency theory states that in an efficient market, prices adjust to information as soon as it becomes available. In theory this hardly ever happens. Whilst insider trading is highly illegal, spread-betting firms allow many inside the City to make hundreds of pounds each day based on the information they have access to. More importantly, there is ****** all the police or FSA can do to stop it.