How do market price of a share is determined ? how do prices move ? Where should a price of share reach ?
1. The price which an individual thinks it deserves
2. The average price of all the investors in the market thinks it deserves .
Which among 1 and 2 ?
The actual answer is not among 1 and 2 , to read further read an excellent article here : http://en.wikipedia.org/wiki/Keynesian_beauty_contest
Other article on what happens in a crowd can be read here : http://en.wikipedia.org/wiki/Crowd_psychology
These 2 articles must give some insight about how the Physcology on which markets work .
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