Can anybody help me understand the stock market?
Help is available but space limitations on A/B don’t allow for a long explanation of the stock market. Your library is an excellent place to start–don’t hesitate to ask your librarian for help in getting some good books. There are places on line that can help too. Try www.vanguard.com, www.morningstar.com or type “understanding the stock market” in a seach engine and you will find as much as you want to read on line. Good luck. Incidentally I understand what the stock market is supposed to do but not some of the things that actually happen. It is like Political Science; you learn there how government is supposed to work then on your own you learn about bribery, lobbiests, deals and so forth.
If you are talking about understanding the volatility that exists in the stock market, fear and greed have a lot to do with it. When news is uncertain, people tend to panic and dump stock at low prices. When things are looking good, people gravitate towards cartain stocks driving up the prices often to irrational levels. Warren Buffett made a shrewd remark recently. He advised that when people are being greedy, that is the time to fear. And when people are experiencing fear, that is the time to be greedy. That is how to buy low and sell high. Too often, people wind up doing the opposite.
