WHAT CONTROLS STOCK PRICE MOVEMENT?

“The only stock price pattern is randomness; you cannot predict the future price movement of a stock (and no one else can either)”

Stock prices are determined by supply and demand; because prices reflect all known information a mispriced security cannot be known in advance. Take every single investor in the stock market universe; they are all doing technical analysis, fundamental analysis, following the advice of a broker, listening to a friend with a hot stock tip, throwing darts at board with ticker symbols on it, etc. – they are doing anything and everything to form an opinion about a stock.

All of those opinions get priced into each and every stock. So when you pick a stock because you think it is underpriced and it will go up in value more so than the entire market you are wrong and you are fighting an uphill battle. You have to understand you do not know any more than anyone else; you do not know more than the stock picker doing the same analysis or opposite analysis as you. The most accurate price of a stock is what that stock is trading at right now; know that market prices are the best estimates of value, price changes follow random patterns and future news and stock prices are unpredictable.