Who Does the Buying and Selling?

Q OK, the market goes up and down because of the buying and selling of stocks. But exactly who's doing all the buying and selling?

— T.K., Akron, Ohio

A Many buyers and sellers are individual investors like us, placing small trade orders through our brokerages. Then there are the institutional investors, such as mutual funds, pension funds, banks and insurance companies. These big guns can account for two-thirds of the activity in the market on a given day.

Stock prices fluctuate due to supply and demand. If a stock is in great demand, its price will rise. If it falls out of favor, there will be lots of sellers, and the price will keep falling until it hits levels at which others will buy.

One way small investors have an advantage over big investors is that they can discover a small gem and invest in it early. When institutions eventually start buying (they often can't get too involved with very small companies), they'll drive its price up, benefiting the smaller, earlier investors.

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— P.D., Macon, Ga.

A Just click over to ww.bankrate. com andclick on "CDs and Investments," and you'll find some of the best deals for CDs. Last time we checked, you could earn more than 4 percent (in annual percentage yield) on a one-year CD and 3.75 on a six-month one. You don't have to live in the state or city where you invest in a CD, so don't think you're stuck accepting your neighborhood bank's less attractive deal. A little research could pay off. Learn more about short-term savings at www.fool. com/savings/savings.htm.

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