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Sorry, but how this example is any different from: > If more people invest more [...] the value increases If you have just Bob, price goes to 11$. If you hav
by ecesena 9y ago
Sorry, but how this example is any different from:
> If more people invest more [...] the value increases
If you have just Bob, price goes to 11$.
If you have Bob, Charlie, and Darrel willing to pay, wouldn't the price possibly go to 12$?
- tedsanders 9y agoSure, maybe Bob buys a share from Sally for $11. Then Charlie buys a share from Sally for $12. Then Darrel buys a share from Sally for $13. In this situation, there were 3 buys and 3 sells. $11+$12+$13 flowed into the market while at the same time $11+$12+$13 flowed out of the market. At the end of the day, even though the share price rose, there were an equal number of buys and sells, with equal inflows and outflows. A higher stock price does not mean the company has more dollar bills in its vault and investors have less. A higher stock price means that stock traders in aggregate now think the company is worth more. Cash flows through markets, it doesn't flow into markets. (Technically what this means is dollars are not 'invested in the stock market.' People are not investing 'more.' Prices going up does not mean more money is being invested in the stock market.)