I often explain the market this way, knowing it’s a simplification—but an important one.
The stock market goes up when there are more buyers than sellers.
The market goes down when there are more sellers than buyers.
Everything else influences why people buy or sell, but this is the mechanism that actually moves prices.
How Prices Really Move
For every stock trade, there is a buyer and a seller. A trade only happens when both sides agree on a price, and that price is constantly adjusting based on how motivated each side is.
If someone wants to buy a stock, they can’t do so unless a seller is willing to sell. To make that happen, the buyer has to entice the seller—usually by offering a higher price until the seller feels it’s worth giving up ownership. That’s how prices rise.
The same process works in reverse. If someone wants to sell and buyers aren’t very interested at current prices, the seller has to entice a buyer, often by lowering the price to a level where someone feels comfortable stepping in. That’s how prices fall.
Prices don’t move because of headlines. They move because buyers and sellers adjust their willingness to transact.
Where the News Fits In
Economic data, earnings reports, interest rates, politics, and global events all matter, but not directly. They influence how investors feel about owning a business at a given price.
Every new piece of information feeds into one simple question: Do I want to buy, sell, or do nothing at today’s price?
When enough people answer that question differently than before, prices move.
This is why markets sometimes fall on “good news” and rise on “bad news.” It’s not the news itself that matters, but whether it causes more people to want to buy or sell at current prices. Expectations matter just as much as reality.
Why This Feels So Unpredictable
Short-term market movements can feel emotional and confusing because markets reflect millions of decisions made by investors with different time horizons, goals, and levels of conviction.
Fear and optimism both play a role, especially in the short run.
The Long-Term Perspective
Markets are not mysterious machines reacting logically to every data point. They are auction markets, constantly negotiating what a business is worth right now.
The long-term return comes from owning businesses that grow and adapt over time. Short-term movement comes from buyers and sellers changing their minds.
Keeping those two ideas separate is one of the most valuable disciplines an investor can develop.
