how does the stock market work, if i buy a stock am i betting on the fact that a lot of people are going tobuy

Question

or in the fact that the company will do well and turn profits or what how does this work

Answer 1

That is a good question! I'll offer a good case scenario. The goal is to find a company with a price per share that is considered low: undervalued or a good time to buy. Keep in mind that there is NO SUCH THING as a HOT TIP when it comes to stocks. That would mean someone had insider info which is ILLEGAL! If you find a company with good finances, leaders, fundamentals and a seemingly low price per share (for that company low).you can proceed further. In terms of the betting aspect, yes and no. The best gauge is in whether financial institutions and fund managers are buying a set companies stock. If that is the case you should be ok. I personally would wait for a bad market dayso as to buy for the lowest price and build up a little at a time. One other note: It can be helpful to keep an eye on stock options to see what options traders are betting on also. These factors will most affect a stocks price per share. GOOD LUCK!

Answer 2

In general, you are betting that someone else wants to buy the stock at a higher price than you paid. Whether this be because the company is "worth" more or for irrational reasons. Too often, it's irrational reasons. In the late 90's, in particular, stock prices rose for companies without profits. In fact, some of the most increased stock prices were for companies losing TONS of money.

Answer 3

Well, you've got some of the aspects down. Number 1 - It is a gamble, whether an educated one or not, it's still a gamble. Number 2 - you are betting on the two factors you cited in your question. Number 3 - you are betting, or "rolling the dice" on the politics of the time, national and international, since political situations greatly impact the market and thus the value of your stocks. There are plenty of other factors to consider, such as how much of a risk taker you are vs. a long term investor, but that would take a more knowledgeable mind than mine to lay out for you, but I felt it necessary to reinforce what you already know, plus add "Number 3" to your understanding since politics are so significant in the stock market's rise and fall. God Bless you.

Answer 4

You are betting that people will buy the stock. It is simple supply and demand, the more demand for the stock, the higher the price. The performance of the company will; however, generate the demand for those looking for long-term investments.

Answer 5

It's all about profits.

Exxon Mobil is currently the most profitable company in the World and it's worth over $400 Billion.

Coincidence?

Answer 6

You are betting that you have

Bought Low

and will be able to

Sell High

..... for whatever reason may cause the stock to go up. Chances are that you will lose the bet.