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> If you buy stock from other stock owners it doesn't help the business Incorrect. That's what keeps the market for the stock liquid, and that contributes to v
by maxqin1 5y ago
> If you buy stock from other stock owners it doesn't help the business
Incorrect. That's what keeps the market for the stock liquid, and that contributes to value which the company can exploit through future stock issuing. Not to mention the indirect benefits to stakeholders within the company in terms of price and liquidity.
- tromp 5y agoIf I buy the stock in order to hold it for 30 years, doesn't that reduce liquidity?
- maxqin1 5y agoNo, because your holding increases the price until someone else decides it's time to tell. In other words, the lack of liquidity increases price. Regarding your original question, that increase is GOOD for the company because it can raise more money for selling the same amount of stock.