It is often said that the stock market is a barometer of the economy. That is to say that stock price movements not only change with the changes in the economic cycle, but also predict the changes in the economic cycle. Empirical studies show that stock price fluctuations are ahead of economic fluctuations. Often when the economy has not yet come out of the bottom, stock prices have already begun to rebound, which is mainly due to investors' consistent judgment of the economic cycle.

We usually call the stock market is the virtual economy, called the opposite of the real economy for the physical economy, the relationship between the two can be said to be like a shadow", each can reflect on the other.

Because of resource constraints, people's expectations and external factors, the economy will not always be in equilibrium. What often happens is that the economy is in a state of disequilibrium. Accordingly, the stock market is characterized by up and down movements.

Expanded Information:

Factors of Stock Market Changes:

In terms of the stock market, in general terms, the factors that affect the movement of stock prices can be divided into: individual factors and general factors.

Individual factors mainly include: the operating conditions of listed companies, their position in the industry, earnings, asset value, changes in earnings, changes in dividends, capital increases, capital reductions, the development of new products and new technologies, supply and demand, changes in the composition of the shareholders, the proportion of shares held by the main institutions (such as fund companies, brokerage firms, QF Ⅱ and so on), the performance forecast for the next three years, the price-earnings ratio, mergers and acquisitions, and so on.

As far as individual factors affecting share price movements are concerned, the quarterly, half-yearly and annual reports of a listed company can roughly determine whether it is worthwhile to invest in the stock and the profit expectations.

For investors who lack general financial knowledge, there are several data that are necessary to know, they are: the total share capital and outstanding share capital of the listed company, the yield of the previous three years and the forecast for the next three years, the dividends and capital increase in previous years, the situation of major shareholders, etc. These are the factors that should be taken into account when choosing stocks. These are the elements that should be considered when selecting stocks.

In terms of general factors affecting stock price movements, in addition to individual stock price movements have an impact, can be used mainly as a judgment on the direction of the market, and the market reacts more positively and sensitively to off-market general factors, this is because any off-market factors are either favorable to the market, or unfavorable to the market.

This means that in addition to the factors of the listed company itself, the judgment of whether the short market or the long market comes from a number of factors affecting the market as a whole.

Baidu Encyclopedia - Stock Price