4 ms·

i take a list of orders from a few grocery stores in my town and go to the market. i've got some orders from people who'll pay £1 for 10 potatoes, some that

by doublejay1999 6y ago

i take a list of orders from a few grocery stores in my town and go to the market. i've got some orders from people who'll pay £1 for 10 potatoes, some that will pay 90p and some that will pay 80p. i meet with the farmers. they're offering 10 potatos for £1. My order s at £1 gets filled. Theyh wont sell me any more, because more people have arrived who bid £1. Still More buyers arrive, armed with orders from people prepared to bid £1.10. Those buyers get their orders filled until yet people arrive and start bidding £1.20. potatos are in demand. those orders get filled and £1.20 is the new price. Later, all the people offering £1.20 have gone home...there's only me left. THe farmers have some potatos left, but no buyers at £1.20 and no buyers at £1, so they lower the price further . I get my 90p order filled. noone else arrives, so farmers lower the price again, and they aceept my 80p offer.. i dont know if that makes any sense ? its gets a litte more complicated, in that the owner of the market where the deals are done, must commit to filling everyone's orders - so they have some juggling to do . they take a small margin in between the bid price and the offer price, in return.

commandlinefan 6y ago
So in your analogy, it's up to the farmer to set the price for the potatoes. In this case, was it Gamestop who was setting the price? Or rather, the shareholders themselves... that is, the people who were buying the stock in the first place?
- DiabloD3 6y ago
  In his analogy, the potato is only worth what is worth what people are willing to pay for it, and the farmer will obviously sell to the highest price first. This is how stocks worth: its only worth as much as what someone is willing to pay for it (shorting not included).
- doublejay1999 6y ago
  Simplistically, yes. At IPO when potatoes are very first introduced to market, he decides what he thinks they are worth. The market will quickly decide the 'real' price. Whether his first asking price is £2.00 £12.00 the market will quickly decide the level. If potato's are the hype root vegetable, many buyers will appear, but if carrots are in fashion, the price of potato's must fall until in order to attract buyers

commandlinefan 6y ago

So in your analogy, it's up to the farmer to set the price for the potatoes. In this case, was it Gamestop who was setting the price? Or rather, the shareholders themselves... that is, the people who were buying the stock in the first place?

DiabloD3 6y ago
In his analogy, the potato is only worth what is worth what people are willing to pay for it, and the farmer will obviously sell to the highest price first. This is how stocks worth: its only worth as much as what someone is willing to pay for it (shorting not included).
doublejay1999 6y ago
Simplistically, yes. At IPO when potatoes are very first introduced to market, he decides what he thinks they are worth. The market will quickly decide the 'real' price. Whether his first asking price is £2.00 £12.00 the market will quickly decide the level. If potato's are the hype root vegetable, many buyers will appear, but if carrots are in fashion, the price of potato's must fall until in order to attract buyers