I have always heard "buy when its low sell when its high". If everyone goes by this, who are the people selling high stock selling it to if everyone is buying low stock? does this make sense? lol i dont know how to word it...thank you =)
2007-05-16 18:47:26 · 10 answers · asked by Anonymous in Business & Finance ➔ Investing
Simply put, the stock market is a form of gambling. The difference is that in a casino, you place a wager on the chance outcome of the dice or the distribution of cards or some other random factor, but in a stock, you are betting on the skill of the people running the company to anticipate what the people doing the buying of a product will do. In either case, you are trying to predict the future, which so far to date, has not been proven that anyone can not do with any degree of certainty. I could toss a coin 1000 times and even if 999 times it came up heads, the odds of the final toss is still 50-50. In the case of a company, the history shows a tendency which you can use against another stock to determine which of the two is a better risk. The stock market is what is known in the gaming circles as a "zero sum" game, for every winner there is a loser. For every person who took a dollar out of the market, there was another who lost that dollar. Casino gambling is not like that, as the house always has an advantage on the odds, so that over time, even if there are big winners, there are even more small losers, which is why Las Vegas has so many casinos with all of the bright lights and hype. Who do you think pays their electrical bill for all of those lights? The same applies to a stock in a sense, who is responsible for the success of the company? Bet on the skill of the people directing the company, not the chance roll of the dice...
2007-05-16 19:37:03 · answer #1 · answered by rowlfe 7 · 0⤊ 0⤋
The short answer, my friend, is that no one really knows. This is considered trading from the "bottoms-up." Individuals that have been in the market for many, many years may be able to begin to do this, but for the most part, it is very hard to do, and like you said, if everyone was only doing one thing there would be no market. As the career commodities trader and CNBC commentator Eric Bolling states, you are better off to "buy high, sell higher." The opposite could be true if you are shorting, buying puts, etc.-sell low, buy lower. Those that apply strict technical, fundamental, and/or quantitative analysis to the game, guarding against risk, cutting losses, and letting the winners run-"tops down traders," are the individuals who stay in this game-not gamblers that try to pick the top or bottom.
2007-05-17 02:02:10 · answer #2 · answered by Anonymous · 1⤊ 0⤋
"Buy when it is low, sell when it is high." This is just the most common maxim (saying) in the investment world.
The truth is that no one knows what is high and what is low. The market price for a stock, by definition, is the price that balances the buyers and the sellers.
So of the jillion investors half think the stock will go higher and half thinks it will go lower.
If anyone actually knows they would be multi jillionnaires. And anyone that professes to know is lying.
2007-05-17 02:18:14 · answer #3 · answered by Patrick M 2 · 0⤊ 0⤋
When a stock price starts hitting highs, there are always people who think it will go even higher and want to ride the short-term wave. Think of the recent housing market. Everyone knew it was at its highest point yet many kept buying in. Besides, that's just one philosophy. Someone following it to the letter would be a "true contrarian," one who goes contrary to the markets. Human psychology factors heavily into why it's hard to be one. Think of how difficult it would be for you to want to buy when everything is in the red or sell when things keep climbing.
2007-05-17 01:53:08 · answer #4 · answered by Sue 4 · 0⤊ 0⤋
A stock is never too high or too low - It is all relative pricing.
Let me give you an example.
Lets say you bought Google at $200 and held it, and eventually sold it at $450 - you would have made $250 per share. However, if someone bought it at $50 and sold it at $100, only made $50 per share.
In this beautiful world of ours, there are eternal optimists(bulls) and pessimists (bears) and they balance each other out!
2007-05-17 02:48:54 · answer #5 · answered by JP 1 · 0⤊ 0⤋
They are selling to people who disagree or people who just buy on a regular basis (dollar cost averaging). but you have answered your own question ..... not everyone trys to buy low and sell high. Most people buy on a regular basis and hold for a long period of time and people sell for many reasons.... like, need the money for XXXXX .... Like buying most people sell for a financial reason not because it's high.
2007-05-17 01:56:16 · answer #6 · answered by richard_garnache_jr 2 · 0⤊ 0⤋
well, simply. you just sell it. don't worry about who is buying it. Its really not a person buying it at all. Your returning it.
also keep an ear out for interest rates. Depending on its movements (up, or down) it can send you into different markets getting the best low and high "trades"
2007-05-17 01:53:08 · answer #7 · answered by Mercury 2010 7 · 0⤊ 0⤋
Stocks trading needs skills and plenty of luck. There will be some who can afford to hold on to the stocks even when the price dived; and there will be others who need the monies and take losses.
2007-05-17 01:53:35 · answer #8 · answered by SGElite 7 · 0⤊ 0⤋
People buy a stock at various levels of it's price and would like to sell it at a price that gives them the gains they have in their minds.Therefore,there are always buyers and sellers at various levels of it's price movement.Simple,isn't?
2007-05-17 01:57:54 · answer #9 · answered by brkshandilya 7 · 0⤊ 0⤋
the greediness, temptation, lust for money, tempts most of us, warren buffet is only one to succeeds.
2007-05-17 01:53:00 · answer #10 · answered by mohan rao kotari k 2 · 0⤊ 0⤋