Ken Fisher Explains How Supply and Demand Drives Stock Prices

Anybody who has taken an Economics 101 class can understand how supply and demand affect the price of goods. However, capital markets are non-linear, meaning that stocks do not react to supply and demand the same way as traditional goods and services do. Ken Fisher explains how this complicated dynamic works in this video.
Demand represents the purchaser’s eagerness to own, meaning in the short term, stocks can move based on investors’ emotion and sentiment any which way, depending on their feeling towards the stock market at that time. When you compare supply to demand for capital markets, supply is much more powerful and linked to economics, because if it’s in a company’s best interest they will shrink their supply to increase their earnings per share. Conversely, they’ll issue new stock if it’s an effective way to raise capital. Since the process of creating and destroying stock supply is slow, supply-based changes take longer to impact prices, but prices can move much more in the long term based on supply.
As a famous investor Benjamin Graham once stated, “in short term, stocks are a voting machine, and in the long term, they are a weighing machine.” In other words, in the short term stocks move on demand and sentiment, and in the long term, stocks move on supply.

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[강환국]

What an amazing lesson! Never gave a thought about stock supply and demand so far.

[harshitraj]

Can someone Please elaborate the supply??
Are we talking about company's supply of products or services in the market?
Or are we talking about the company's supply of share in the stock market??

[Nates]

i feel what youre trying to say, but terrible explination