Because new money is brought into the stock market. As time goes by people buy more stocks and thus bring in new cash in the market. There is a bidding process happening behind the scenes when people want to buy new stock and the end results is that higher demand for stock will increase its price. That is the simplest explanation, the more mechanical explanation which is often missed from various discussions.
In my list of books I have read related to investing you will find “Why Does The Stock Market Go Up?” by Brian Feroldi, an excellent introduction to different factors which lead to stocks price going up in time. The simpler part of bringing in new cash and of demand driving prices up is missed in that book, but now that you know this you will understand it better.
Knowing why the stock market goes up allows you to understand better the dynamics of IPOs and what a positive return in a portfolio actually means. One of the most difficult things in investing, and by this I mean stock picking, is finding the right context for any given stock and company, a terms more closely related being stock-company, as there two are related in real-world scenarios.
While technically a stock is a promise on future cash flows, mainly dividends or cash when the company is sold, in more practical terms a stock can be seen as a trading card. In the 90s the kids around the block had soccer cards with the players they liked and they were trading those cards left and right. Cards depicting better soccer players were in higher demand than those of unknown players. The stock market, the market where you buy the stocks of companies, is similar as people trade among themselves the stocks in a secondary market.
In terms of stocks, you either buy the stock in a primary market or listing at the IPO directly from the company or, more probably, you buy the stocks from other players in what is called the secondary stock market. These “trading cards” will have different prices at different times and when demand is high they will cost more and when people are disappointed in the underlying company they will cost less. I said “cost” as that is different than actual “value”, of the stock or company.
One of the things you will learn sooner or later is that the notion of value is so vague as to mean nothing without enough context and you will notice that it is relative in concept, in any case. Relative as in pretty much like an opinion, more less close to actual value, but never really “true” value. The only thing historically correct and true-to-fact will be the store price. When you check the price of a stock in time you know that the prices recorded at those times are the actual prices people paid for the stock. Granted, there are loads of estimations and rounding and averages in there as well, but as far as true-to-fact and real-world concern go it can be considered “true”.
The goal of a stock picker is to find a good enough stock-company so that when the time comes the stock picker can sell it at a higher price. I guess you’ve heard of the “buy low, sell high” or “buy high, sell higher” mantras.
That is all there is to it in stock picking: find good stock-companies, wait for people to buy more of their stocks, then sell at a profit, ideally while still more people pile into the market, meaning while the stock market goes up.