I buy and sell stocks all the time but i never really understood exactly what happens i buy the stock off someone selling it correct? so when does the company make money off me? just from the IPO?? and could it ever happen that no one will buy my stock? if i try to sell it and it starts to crash? I dont buy OTC stocks if that helps any... I just want to know like exactly the whole process like From me buying a stock what is going on and when i sell what exactly is going on the whole time! thanks alot! it just easier listening to someone rather then reading articles online!
2007-03-26 12:56:59 · 5 answers · asked by gspaypal 2 in Business & Finance ➔ Investing
Companies are not related in any way to you and they don't take any money from you.
The seller takes your money.
When a company goes public they sell ALL THEIR SHARES to the Underwriters.
Underwriters then sell their shares to their clients.
Eventually one of them sells his shares to you.
If nobody buys your stock then the price drops and drops and drops until somebody buys your shares.
In Theory, your stock could drop all the way down to $1.00
In reality that cannot happen because companies have buildings, cars, money in the bank, patents, brands and those things are worth something to somebody.
Only if the company has more debt than value (Near Bankruptcy) then the stock will be worthless.
You are supposed to read the Annual Reports and you are supposed to sell before that actually happens.
2007-03-26 14:43:27 · answer #1 · answered by Anonymous · 0⤊ 0⤋
There is a fair amount of behind the scenes information managed by a broker and without reasonable knowledge of the process it could cost some bucks. One site with a investing school (free info) is the Motley Fool. They also have good investment tools (Url below).
I've read Jim Cramers book, "real money : sane investing in an insane world" which taught me some great stock buying/selling rules.
2007-03-26 13:14:12 · answer #2 · answered by Frank B 2 · 0⤊ 0⤋
You are absolutely right; the only time the company "makes money off you" is at IPO.
Could it ever happen that no one will want to buy your stock? Theoretically, yes. In fact, in some less liquid markets, this happens all the time. This said, both NYSE and NASDAQ have mechanisms in place to prevent it from happening; NYSE has specialists that stand ready to buy and sell at posted prices, NASDAQ requires at least three market makers for each stock. Short of market-wide meltdown (October 1987 style), both systems work...
2007-03-26 13:02:47 · answer #3 · answered by NC 7 · 0⤊ 0⤋
This is probably how the broker is making money off of you.
1. You buy at the "Ask Price"
2. You sell at the "Bid Price."
3. The Bid Price is lower than the Ask Price. So you pay that "spread"
For example, when you call your broker, you might have to buy it at $93.40 while other customers are selling it at $93.35.
The brokers take that profit called "the spread."
You also pay a COMMISSION.
(I made up those prices for IBM. But, I hope it illustrates the point.)
2007-03-26 13:02:07 · answer #4 · answered by Anonymous · 0⤊ 0⤋
the companies like Reliance Capital, Infosis technologies,BHEL etc are products shares. in case you're invested in first time,it particularly is greater effectual to speculate in mutual money. because of the fact danger could be assorted.
2016-10-20 00:13:37 · answer #5 · answered by ? 4 · 0⤊ 0⤋