3 ms·

ELI5: I think I got this but just to be sure. Can someone just to make it extra clear to me just in case I miss something. If someone is making money with a sto

ELI5: I think I got this but just to be sure. Can someone just to make it extra clear to me just in case I miss something. If someone is making money with a stock, some other person is losing money right? Their ain't like some magic magic money making machine or premium added somewhere in the process? Right? If so, what were these people thinking investing. That they were the first to get out? One thing you could ask is is the average Redditor smart enough to see the consequences or is this really a bunch of teens putting up their savings being hyped by a hype machine?

martin_bech 6y ago
Well that was the idea, take the hedgefunds money.. At first it was a value play for some, GME was undervalued, then it became a, look all these funds are so short the stock, we can make them hurt, and make them pay us.
amf12 6y ago
> If someone is making money with a stock, some other person is losing money right? Not necessarily. Investing in stocks isn't necessarily a zero-sum game like a lot of people assume. Both the buyer and seller could make profit on a transaction. Imagine person A bought AMZN for 1000 and later sold it to person B for 2000. A made 1000, and now B made 1000+ on it.
- thinkingemote 6y ago
  There's also people C and D who sold to A and bought from B... So looking at it from a whole is different from just the buyer and seller. There's a chain. I agree it's not a zero sum as stocks can rise independently of just market activity if the company is doing well.
pjc50 6y ago
No, there's a real flow of money: a stock entitles you to (a) the future dividends, if any (b) potential income from stock buybacks, which are basically dividends with a different tax treatment, and (c) a vote on the company to control the first two. (Some companies have non-voting stock, and some don't pay dividends, but in all cases everyone is holding out for the eventual promise of capital returned from the business's actual profits.)

martin_bech 6y ago

Well that was the idea, take the hedgefunds money.. At first it was a value play for some, GME was undervalued, then it became a, look all these funds are so short the stock, we can make them hurt, and make them pay us.

amf12 6y ago

> If someone is making money with a stock, some other person is losing money right? Not necessarily. Investing in stocks isn't necessarily a zero-sum game like a lot of people assume. Both the buyer and seller could make profit on a transaction. Imagine person A bought AMZN for 1000 and later sold it to person B for 2000. A made 1000, and now B made 1000+ on it.

thinkingemote 6y ago
There's also people C and D who sold to A and bought from B... So looking at it from a whole is different from just the buyer and seller. There's a chain. I agree it's not a zero sum as stocks can rise independently of just market activity if the company is doing well.

pjc50 6y ago

No, there's a real flow of money: a stock entitles you to (a) the future dividends, if any (b) potential income from stock buybacks, which are basically dividends with a different tax treatment, and (c) a vote on the company to control the first two. (Some companies have non-voting stock, and some don't pay dividends, but in all cases everyone is holding out for the eventual promise of capital returned from the business's actual profits.)