It can help to understand that prices often move because of supply and demand: If more investors want to buy a stock than sell it, the price goes up. If more investors want to sell a stock than buy it, the price goes down. A lot boils down to how investors feel about a company and the growth that they expect in the future, certified financial planner at Betterment Nick Holeman tells CNBC Make It: "Every investor has their own opinion on what the stock is worth." Those views are shaped by news like earnings reports, relevant current events and any positive or negative buzz about the company.
Stocks are forward-looking, says Holeman, "meaning, they're always trying to predict the future. You buy a stock because you think that it will go up in the future. Of course, it's going to be inherently difficult to predict the future and that's one of the reasons why there's so much fluctuation in prices."
The uncertainty that comes with investing in the stock market is why you tend to get good returns.
"You're basically getting compensated to take on that risk," says Holeman. "If the stock market was not as unpredictable, then there's less risk involved, which means that there's less reward involved."