If a company has several million shares of stock that is supporting the value of their company, and suddenly there are 1000000 transactions, half to buy and half to sell, where did all those buyers and sellers all of a sudden show up? The sellers have to have something else they want to put their money it, right? How come so many at the same time when there are at least as many wanting to buy? I just don't get it unless the company extends the shares?
2007-02-20 06:11:00 · 3 answers · asked by Anonymous in Business & Finance ➔ Investing
What if 500000 want to buy, does that mean that 500000 have to sell whether they want to or not?
2007-02-21 06:12:11 · update #1
Everyone has their price whether it's to buy or sell, and that price is determined by supply and demand. So say the price is so low no one will sell, but demand is high and ppl want to buy, the price will go up, as the price goes up, ppl with a lower reserve start to sell, and the buyers get their shares. If people don't want the shares, and less demand for it, prices go down, until demand is there.
This continues on a daily basis, and the prices goes up and down, up and down
2007-02-20 06:14:51 · answer #1 · answered by Anonymous · 0⤊ 0⤋
I think you have touched the basics of how markets work.
Just because 500,000 shares are available , it does not mean that one entity shows up to buy all the available shares.
Individuals, institutions, hedge funds, mutual funds or just about anyone who has interest to buy the shares will show up. However, what interests them is ultimately how strong the company is and if there is value in buying the shares. They will invest their money only if they think that the value of the share will go up in time. If not they will not buy.
However, there are a lot of speculators who will buy in early in the hope that it will appreciate. As more buyers jump in, prices rise. And when they think that it cannot go any higher, they will sell it. This creates an endless chain of supply and demand based on the perceived value of the shares. Also this creates the price to fluctuate.
2007-02-21 00:15:39 · answer #2 · answered by fx_invest74 2 · 0⤊ 0⤋
The company is not involved in shares that are bought and sold in the exchanges or through NASDAQ. These are transactions between individuals or institutions
More than likely, there aren't 500,000 buyers. There may be several buyers and sellers who are moving large chunks. For example, a large mutual fund that is worth several billion dollars may want to rebalance their fund. This might cause them to sell 50,000 shares of one stock and buy about the same amount of another. For them, this is just a small portion of their portolio.
The fact that the market can handle these kinds of transactions is the reason why investors continue to look to the markets in the US. Providing liquidity is the whole reason for the existence of the markets.
2007-02-20 14:24:28 · answer #3 · answered by Ranto 7 · 1⤊ 0⤋