One simple way of thinking about shares is as little more than bets on a boom. This applies in general in that nearly all shares are bets on a buoyant economy but is also works at a more specific level.
This is most obvious in relation to commodities. Oil shares have done well since the late 1990s. Shares in oil exploration and production company, Tullow Oil, have risen from 40p in 1998 to 762p currently after peaking at 1002p. The main reason is simple, since 1998 the oil price has climbed from $10 to nearly $150 at one stage. The same goes for a share like BHP Billiton. Since 1998 the shares have climbed from 100p to 1436p after a peak 2205p. This is not because the management have suddenly become geniuses but rather because of a sustained rise in the price of their principal products. It is all about being in the right place at the right time.
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