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Why share prices drop?

Updated: 9/21/2023
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10y ago

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If anyone could actually come up with The Real Reason Share Prices Fall, we'd all be rich.

The real answer is, no one freakin' knows why stock prices fall. I'll give you an example.

You are a company that makes cell phones and you're called CellPower. You labored long and hard and came up with a Brand New Phone that's just great. In a logical world, this would make your stock go up.

Well, not necessarily. "Samsung has a phone with a 4.3" screen but CellPower only has a 4.2" screen. This means Samsung phones are better." Your stock drops.

"Toshiba has a phone with 6 hours battery life but CellPower only has 5.5 hours. So Toshiba phones are better." Your stock drops.

"Customers say your phone has weird-feeling edges." Your stock drops.

"Customers like Apple's logo better than CellPower's." Your stock drops, and sillier things have happened.

On the other hand...

"Samsung is having problems getting batteries for their new phone. CellPower makes its own batteries and has no supply problems." Your stock rises.

A lot of why share prices perform as they do is controlled by things you simply cannot control, like the wind. If the wind causes your shipment to be late coming in from Singapore, your stock price will fall. You can't control the wind and if you could you'd probably have it blowing against the back of the ship so you get your stuff faster.

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