In the strict sense of the term, the prevailing share price of a company quoted in the exchange and what is going on within the company in the production, distribution and sales units are closely linked. One impacts the other and the share price needs to be the true index of the strength or weakness of the company. This is the basic rule. But this rule is rarely honored as several forces tell upon the market and they push and pull the price in different directions. Buying and selling activity is the outcome of it. Isn't it strange, on a given day, several thousands buy the same share and an unspecified numbers sell it? Do both these categories, which are in disagreement as for their decisions on the share, ignorant of Stock Market basics? The answer is both yes and no. One of the categories has made the wrong decision. Alternatively, one say that the decision that is right for one can as well be wrong for the other. Variety is the spice of life.

Like the size of the waves in the ocean, share prices are unpredictable. With no cut and dry formula to the governance of the prices, an investor has to continue with one's guess work, on the basis of his past experience. If one is a new entrant to the field, he proceeds with his theory knowledge gained through literature, bulletins and journals published by the brokers. He learns by mistakes. The continued popularity of the share business since the last couple of centuries indicates that this business has some substance. The investors see the latent possibility of profits by dealing in shares. An interesting game is invariably played in the exchange, every minute, hour and day. The mysterious happenings baffle all concerned. Some one earns millions, and some one struggles to make a few hundred dollars and some return home with a long face, suffering losses. `Analysis, research, experience, academic qualifications?nothing comes to one's rescue. What is happening in this area after all! Even the Secretary, Treasury and the Governor of Central Bank of a country are often taken unawares by the stunning developments in the Exchange. Why their expertise fails them to anticipate and control the situation?

Nevertheless, basics are basics. Every trade has some special rules and formulas of play by which it is influenced and governed. Presently, investors are of two categories. The common share holders of the company and the preferred shareholders! Technically, common share holders are part of the administration of the company, even though they do not participate in the day to day affairs. They get dividends and bonus shares as per the performance indicators of the company. Preferred share owners get the fixed life long dividends but they do not have the voting rights.

Next important aspect is the price of this share. As already stated, no one knows why the share price fluctuates, many times on day to day basis. Technically one can say that the prices are the responses to the demand and supply of shares. But this is not the whole truth. Ground realities are entirely different.

With all the uncertainties, one has no other alternative but to learn some fundamental principles of investment, to be on the safer side as much as possible. Make use of all the tools available, like journals, information on the internet, your broker's advice, past history of the share, current market mood of the share, future prospectus for the products of the company, likely impact of the competition on the products from the foreign sources etc. The more methodical you are, the chances of the losses are minimal. Just as reckless driving is dangerous, to cultivate reckless investing tendency is also dangerous. The best basics of stock market are to avoid losses and to book profits.