It's people's emotions getting the better of them. It's people jumping on the bandwagon on good news and trying to get off on bad news. People often buy a stock after it's gone up a lot, driving the price up even further. They see it as a winner, want it and are wiling to pay too much for it to get it.
People are also apt to want to ditch a stock if it goes down. They're afraid it will keep going down; and if enough people panic and sell, it drives the price down even more. Greed and fear are the two big reasons for the swings.
The goal should be to buy low and sell high; but the person motivated by greed and fear often winds up buying high and selling low.
I also never buy a stock in a company that has never paid dividends. I know some start-ups do spectacularly, and I know about the "growth companies" too; but they don't interest me. They're too speculative for me.
Stocks with a high P/E ratio (price to earnings ratios) also don't interest me. Those are more apt to crash badly because so many people want to buy them the price is unrealistically high; and eventually bad news is apt to come out and they'll crash. Tesla finally made a profit -- finally -- but it's still massively overpriced. I expect to be in my grave before it pays a dividend. GM may not be as glamorous, but it looks like a bargain to me now. If I wanted to buy an auto stock, it would be GM. It may not pay a dividend this year since profits may be down; but it's a far more solid company with a more reasonable P/E of 6.8, and it pays dividends most of the time. Tesla also turns me off since I think Elon Musk is a nutcase -- he needs to stop smoking so much weed.
