Rise, fall of stocks

Q

Why do stock prices go up and down from day to day?

— K.W., Hendersonville, North Carolina

A

Over the long run, a company's stock price will generally rise or fall in accordance with changes in the value of the company's underlying business. As Netflix, for example, adds more subscribers and rakes in more money over time, its share price will rise.

From day to day, though, stock prices fluctuate based largely on what investors think the stock is worth. They might react to a variety of developments, like the company reporting a strong (or weak) quarter; its management changing; being upgraded (or downgraded) by a Wall Street firm; it launching new products or services; the company acquiring another company or being acquired; being involved in a scandal; signing (or losing) a big contract; or changes in supply or demand for its offerings.

Sometimes stocks will rise (or fall) on rumors, or simply on investor enthusiasm — perhaps because many other stocks are rising. Aim to be a long-term investor, and don't pay too much attention to short-term moves.

Q

What books will give me a solid grasp of the energy industry and its history?

— N.O., Kalamazoo, Michigan

A

Try Daniel Yergin's Pulitzer Prize-winning classic, “The Prize: The Epic Quest for Oil, Money & Power” (Free Press, $24), which was followed by “The Quest: Energy, Security, and the Remaking of the Modern World” (Penguin, $22) and recently, “The New Map: Energy, Climate, and the Clash of Nations” (Penguin, $22).

Also good are “Energy: A Human History” (Simon & Schuster, $22) by Richard Rhodes and “Energy and Civilization: A History” (The MIT Press, $20) by Vaclav Smil.