At the same time, the stock of a well managed but boring company like a paper mill, with steady customers and a long history, may suffer from market stagnation. The stock market is composed of millions of investors from different cultures around the world, with widely differing investment philosophies, personal psychologies and financial goals. Those millions of investors are wired into a digitized global financial marketplace. Money moves at lightning speed from country to country, and from stocks to bonds to mutual funds, day and night. If enough investors buy or sell based on distorted perceptions of the markets, companies and events can be affected.
Wise investors track the group psychology of the market, which changes hour by hour, day by day.
Macro Markets and Your Money Global financial markets and the nation's economy are interdependent, and changes that occur in one area can affect other areas. Inflation, the unemployment rate, consumer spending, political power shifts and many other economic forces influence the rise and fall of securities' prices. For instance, the Federal Reserve Bank, the central bank of the United States, periodically tinkers with the money supply by raising or lowering interest rates. These actions have an impact on financial markets, often immediately. In fact, rumors about impending Fed actions have been known to create major upticks and downdrafts in the stock market.