How does the value of a stock gets drive down?
Posted by admin in Finance Saturday, 19 February 2011 19:16 2 Comments
This is probably a stupid question, but I got stuck when I was reading up on how the stock market works. I read that when a business goes bad, investors start selling their stock, which drives the price of the stock down. Don’t you have to sell your stock to some other person in order to get it out of your hands? And who would buy the stock when its value is plummeting?
stocks fall on fear and rise because of greed. Outstanding shares are traded because one party either made their money or they think the price is headed lower. The buyer thinks the price will rise, so he or she buys ‘em. Basically, buyers look for future earnings growth.
Fortunately, there are speculators who want to buy when someone else is selling.
Otherwise there would be precipitous changes and greater distance between the buy and sell prices.
Why? Because investors have different levels of access to the news, have different investment goals and styles,