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Why do the prices of stocks go up and down?
The thing that should be really focused on is that the price is based on the existing appraisal of the situation. When things start to change in the company and these changes come out and are known of, the appraisals will then become more or less favourable depending on the change. As far as other stock is concerned, these particular shares then go up or down. If the factors that were appraised were reviewed and looked over in the correct way, the stock then turns out to be lastingly more or less valuable in relation to the other stocks and this causes the shares to then stay up or down. If more of these equal factors keep on coming about, they are then acknowledged by the financial community. This stock then goes or remains either further up or down, depending on each individual case.
This means that the price that the stock sold around five years ago might have very little or not any relation at all to the price at which that same stock might be at today. It is possible that a company might have brought about a certain amount of new knowledgeable new executives, perhaps a series of new a very profitable products, or any amount of similar wanted features that make the stock essentially worth more than it did in relation to the price of other stocks that it was worth five years ago. There is also the case in which companies sometimes end up in the hands of inefficient management and perhaps has fallen so badly in relation to competition that the only way that improvement could take place is if new capital were placed into the picture. This factor might bring about such a great amount of dilution of the shares that the stock now could definitely not be worth more than a fraction of the price of the stock five years ago.
With this picture in mind, it is possible to realize why investors so often times miss stock which would have made them some really big gains in the future and why they instead pick stocks that bring them smaller gains. By placing a lot of focus on the stock that has not gone up quite yet, these investors are without knowing it, giving into the illusion that all stocks go up around the same amount an that the one that is already on the top and has already risen it probably not going to keep rising anymore, but for some reason are under the impression that the one that has not risen is going to. This is completely false though, nothing could be further from the way it actually works. Just because a stock has or has not risen in the past few years does not mean anything when it comes to deciding whether it should be bought right now in this moment. What should be focused on is whether sufficient improvement has been done or is probably going to happen in the future to give good reason for significantly higher prices than the ones that exist right now.