when an invester sells his stocks who buys them? are they guaranteed to sell?

Answer 1

Without getting too technical, here is an answer I gave to this same question several months ago. It was really good and took me a while to write, so please excuse me if it's more detail than you were looking for!

How Stocks Are Born:

A lot of companies that do well would like to expand, but they don't have enough money to build a new building or hire new people. What a lot of these companies decide to do is "Go Public."

When a company "Goes Public" they say to the world: We are going to sell you a piece of our company. You can own a percentage of the company an share in our returns. When we do well, your stock will do well, and we will pay you a dividend from time to time as part of profit sharing.

A company goes public with an "Initial Public Offering" of stock also known as an IPO, and usually does this after a bunch of banks get together and figure out how much the company is worth, how much of the company is going to be offered (in terms of percentage) to the public and they set an initial price point.

During the IPO the company sells stock to private persons, or even big banks (like mutual funds and other investment companies) who think the company is going to continue to be profitable. The company takes the money they get from the IPO (in a perfect world) and re-invests it in the business model they have that is making money. In that way, they can build new buildings, expand and make other "Capital" acquisitions to increase the potential profitability of the company.

Stock Exchanges:

A stock market is a place where stocks are routinely traded by investors. A trade starts with an "Ask" price, which means a person says to everyone at the stock exchange, "Hi, I have 500 shares of company XYZ and I want five dollars and fifteen cents a share for them." Now, in the modern world, that information is also relayed via computers to basically the whole planet. Everyone from Etrade to Ameritrade to Scotttrade to hundreds and thousands of private companies sees that "Ask" pop up onto the screen at the stock exchange. So that's what a stock exchange like the New York Stock Exchange (NYSE) really is. It's basically a giant electronic bulletin board.

The next step to a stock trade is a "Bid". A bid tells the world, "Hi, I'd like to purchase 500 shares of stock XYZ and I want to pay five dollars and ten cents a share for it." That is also broadcast to the whole world via the giant electronic bulletin board that is the NYSE. When a bid and an ask price match up, you have a "sale".

Stock Exchange Seats:
Not everyone can get direct access to the NYSE. In fact, the vast majority of trades occur between major corporations acting on behalf of investors. For example: If I want to buy 500 shares of stock XYZ, I'd go through Etrade, which would actually negotiate the price for me and "broker" the deal at the stock exchange. In a real sense, I am giving my money to Etrade and trusting them to give me the stock I asked them to buy. The trade itself will be recorded as happening between Etrade and whatever big company "brokers" that stock for the stockholder. In fact, Etrade could even be BUYING stock from itself if one person using Etrade is selling when another person is buying.

The corporations and people who have seats on the NYSE are in the very privileged position of being trusted to follow through on their trades. Think of it as an infinite credit line. If Etrade says they want to buy $100,000,000 worth of a stock, then the trade executes and there is every expectation that they have the cash to cover the trade.

Trade Window:
There is typically a three day window during which the trade is settled up between the two corporations that are brokering the deal. This timeframe allows the companies to register the trades with whatever company is being traded, and allows the electronic funds transfers to take place.

Stock Trading:
Most stocks are traded based on the estimated future performance of the company. There are a lot of factors that are weighed in determining whether a stock is a "good buy", but it boils down to whether the market as a whole perceives that stock to be doing well. Analysts look at things that are affecting the sector the company is in (for example: housing, electronics, service) and they look at the economy as a whole. These are called macroeconomic factors. Analysts also look at the business model and practices of the company itself, and at the performance of other companies in similar markets to determine whether it is a good buy. These are called microeconomic factors.

When it's all said and done, the stock has a "rating" from a bunch of different organizations and it typically looks like, (Sell, Buy, Strong Buy, Hold). Which basically tells people what their short term strategy with the stock should be.

The major fluctuations in the price of a stock have to do with individual and corporate investors trying to stay one step ahead of the rest of the investors out there. They see change on the horizon, or they see macroeconomic factor that they know influences the stock price and they try to make a trade out ahead of that change in order to realize some profit. This is called "timing the market". When you time the market, you are not buying the stock for what the company is worth so much as for what you think people will think it's worth in the near future.
It's a complicated game, and not for the casual investor.

The better bet for a beginner is to take a look at stocks that have had historically good performance and purchase and hold them. Their value will increase over time by virture of it being a good, stable company.

I'm running a little long in this reply, but I think you get the idea. The stock market is very simple. Trading stocks can be very complicated. Purchasing stocks is very easy (go through a broker like Etrade, or even use an actual stock broker from the phone book). Knowing when to buy, sell and hold your stock will determine whether you make money or lose it.

Buy low, sell high?

How do you know when it's stopped going low?
How do you know whether it's going to keep going higher?

If you can answer those questions, you'll be doing very well.

Enjoy!

Answer 2

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Answer 3

For every public stock that is traded, there is a market-maker. For NYSE stocks, the market-maker is called a specialist. He is charged with making an orderly market for the stock. He is also the buyer/seller of last resort. If someone wants to buy or sell, he usually matches that person up with someone else who wants to sell or buy But if you want to sell and no one else wants to buy -- he has to buy it. During the stock market crash of 1987, a lot of specialists lost money because they were forced to buy shares.

For NASDAQ stocks there are multiple market-makers -- who are employees of major investment banks. For each stock where they make a market, they are required to post a price that they are willing to buy shares at -- and a price where they are willing to sell at.

Now -- finally I can answer your question. If you want to sell your shares, you are able to make a Market Order or a Limit Order. If you sell using a Market Order -- it is guaranteed that you will sell your shares. However, the price that you get is not guaranteed. The market maker must sell to you at the best price possible. If you sell using a Limit Order, then you can specify a minimum price. You are guaranteed this price or better if it sells. However, with a limit order, there is no guarantee that it will actually get sold.

Answer 4

Stocks are bought and sold through middlemen...traditionally it was on stock exchanges, such as the New York Stock Exchange. Nowadays it is primarily done electronically. Buyers and sellers are matched up. You never know who you are buying from or selling to, it could be an individual investor, day trader, mutual fund, hedge fund, etc. If you put a market order in you are essentially guaranteed to sell it at the going market price. If you specify a limit price at which you want to sell, you may or may not get executed depending on whether the market trades at the price you specified.

Answer 5

Depends on the trading venue.

When an investor sells stock through an exchange, the buyer is not in fact another investor; it's a financial institution called a specialist (on NYSE) or a market maker (on NASDAQ). The reason specialists and market makers exist is to guarantee that there will be a market for investors who want to buy or sell. What is not guaranteed is the price...

In over-the-counter (OTC) markets, there are no specialists or market makers; hence, liquidity problems are more common.

Answer 6

The stock is sold on one of the stock exchanges (NY, American, Nasdaq) where individuals, mutual funds and other institutions place their orders to either buy or sell.

The stock will sell unless it is what is called a "thinly traded issue" which means that there is very little volume of that stock traded every day. It may take some time also to sell if you have
a large number of shares of this type of stock.

Answer 7

An investor cannot sell stocks without a buyer. The way it works is you tell your brokerage to unload a stock. Your brokerage tells its floor brokers to sell that stock at that price. The broker then attempts to sell the stock - the investor doesn't get any money from the sale until it actually goes through.

Answer 8

Study the term "fail to deliver" also known as naked short selling. If the American Public was aware of the thievery in the Markets there would be a collapse of the World financial markets. Have you seen how many SEC people have resigned in the last year? Have you seen how the people that we thought we could trust have been fined lately. Just today (August 28,2006) Prudential was fined $600 million for their thievery. I would close out every 401k and IRA before you lose it all to these crooks. Look up hedge fund while you are at. Look up off-shore hedge funds.

Answer 9

Other investors. In some cases, your broker or other "special" entity can buy it from you, but if there is a problem, there is no guarantee you will sell as fast as you want or at the price you want anyway

Answer 10

Investors buying the stock buys them. There is not guarantee... if a company is taking a serious nose dive (e.g. going through bankruptcy) you may end up holding worthless shares that no one wants to buy.