First of all how is it possible that everybody can just sell their stocks at the same time?
Who is buying them?, when they know that they will probably drop even further or are worthless almost?
If everybody went to sell their US bonds tommorrow , who would buy them back? Where would they get the money?
Just the same as a company , how does that company pay back the money given to it by share holders if everybody wants to sell?
2007-02-05 06:02:51 · 8 answers · asked by Anonymous in Business & Finance ➔ Investing
There certainly are times when everyone wants to sell at the same time. When that happens, prices collapse. It happened in October 89 most recently. Wow. Was that exciting.
There are it appears always or almost always people who are willing to buy something if they think the price is right. So sometimes when the price drops enough they will jump in and buy. It sometimes happens when a person or institution owns a very very large position in a stock. They attempt to support the price at some level to prevent their position from loosing even more value. Or they attempt to support the price perhaps while attempting to liquidate much of their holdings. I know that sounds counter intuitive, but it has been done in the past.
Companies and governments do not pay back the money given to them if everyone wants to sell. Banks are holding billions in Argentine bonds that they will never get more than a pittance back.
2007-02-05 07:20:24 · answer #1 · answered by Anonymous · 0⤊ 0⤋
OK...first of all a company does not give you money if you sell your stock.
The company has little to do with stock price, you are selling to another investor who thinks they have a good reason to buy (they are not necessarily right in their reasoning)
The price you receive is what someone is willing to pay.
Not all people hear news at the same time, so maybe someone didn't here the news and is buying stock,
As for bonds, it is the same as stock, there is always a buyer, it is just not known at where the price is accepted.
That is why yeild and prices change in the bond market.
2007-02-05 06:12:14 · answer #2 · answered by bob shark 7 · 0⤊ 0⤋
Every stock has what is called a specialist who's job is to buy ans sell that stock. They are on the floor of the stock exchange. It is He or She who set the stock price. If a lot of sell orders come in and there are not any buy orders they drop the price of the stock and have to buy it from you. When buy orders come in They sell to you but they raise the price a little so they can make a profit it all works out good for them because they make a lot of money over the long term.
2007-02-05 06:31:03 · answer #3 · answered by ? 6 · 0⤊ 0⤋
In US economy almost all of the transactions are transparently done. So is stock transactions. Companies stand ready to repurchase their stock meaning they do business stably. They do it through Specialists in the Exchanges who are supported by them. It is like a replacement or return window in a Supermarket. Company management work to make their stock reliable and dependable even thouth stocks are riskier than bonds, in US the stocks are almost riskless except for the environmental changes which changes the price or creates volatility. The situation you described is one of them on news sometimes the stock prices fluctuate temporarily to gain back later on.
If you cannot find a buyer for your stocks then the broker approaches the Specialists who quotes the price based on the existing price of the stock or the last traded price. If it is a sale he will buy at a tick below the last sale price or if a buy a tick above the last concluded transaction.
2007-02-05 06:15:16 · answer #4 · answered by Mathew C 5 · 0⤊ 0⤋
There are speculators in the stockmarket that will buy stocks in the hope that they will go up again. It's called supply and demand.
Sometimes shares drop very low and people don't want them - think Exxon, Barings etc.
It stands to reason that if no one wants to buy then people cannot sell.
The shares are not sold back to the company but other investors.
2007-02-05 06:13:11 · answer #5 · answered by Biz Guru 5 · 0⤊ 0⤋
The company has no legal requirement to repurchase shares bought by investors.
If a stock drops in price, some people might buy it in hopes that it will rebound, and they are getting a discounted price.
2007-02-05 06:08:04 · answer #6 · answered by Anonymous · 0⤊ 0⤋
it is not always possible to sell stocks and shares if the supply of shares far exceeds the demand you end up with a crash hence the wall street crash
2007-02-05 06:13:07 · answer #7 · answered by Anonymous · 0⤊ 0⤋
None of this is important to know when investing. Most totally inaccurate as well.
2007-02-05 07:45:41 · answer #8 · answered by vegas_iwish 5 · 0⤊ 1⤋