Shares market ish zero sum game?

[glarerder]

the profit that the company earn can be used to do stock buyback which reduce the quantity in circulation , therefore your pizza slice grow bigger
or the company can distribute out the profit as dividends (let gas out of the balloon)
or use the money to invest for more future profits

So either the company itself or retail/institutional investors (aka public/hedge funds, sovereign funds, etc companies) buy, stock price increases?

 

[Krabs.]

So either the company itself or retail/institutional investors (aka public/hedge funds, sovereign funds, etc companies) buy, stock price increases?

my opinion
it's like a snapshot or photo in timeline of expectations

example if monday at market close .... the stock is $100
tuesday midnight war happen , oil and gold price shoot up
lets say the stock is oil industry related .... higher oil price suggest higher profits
tuesday market open at $120 and settle down at $122

the gap between $100 to 120 is no-mans-land .... nobody bought or sold at that range ... but as a whole everybody's expectation moved up in a range to 120s

 

[glarerder]

my opinion
it's like a snapshot or photo in timeline of expectations

example if monday at market close .... the stock is $100
tuesday midnight war happen , oil and gold price shoot up
lets say the stock is oil industry related .... higher oil price suggest higher profits
tuesday market open at $120 and settle down at $122

the gap between $100 to 120 is no-mans-land .... nobody bought or sold at that range ... but as a whole everybody's expectation moved up in a range to 120s

The 120 price is then decided by who? The middlemen aka brokering firms?

 

[Hyruga]

Not zero sum wor... Company can grow to massive size.

Just look at Ripple. They are tying up with swift to perform transactions for banks.

 

[glarerder]

Not zero sum wor... Company can grow to massive size.

Money must come from somewhere. Question is where?

 

[articland05]

Money must come from somewhere. Question is where?

this kind of qns best answered by GPT le

 

[Krabs.]

The 120 price is then decided by who? The middlemen aka brokering firms?

there are people who immediately attempt to do a fresh new calculation at the new oil price can estimate how much % better profits and it feed into a new expected price target .....
many firms doing the same calculation will have varying results and then the market do a tug-o-war as people buy and sell , majority wins at deciding the final price

example if some people think 110 is the fair value .... they see 118 they sell , expecting the price to curl back down in future after initial excitement end ........
then there are people who calculate 124 is fair value .... they see 116 at current time they think got room to grow to 124 so they buy .....
pessimistic vs optimistic
after the tug-o-war it settle at 120 at market close

 

[buttbERry]

i feel is a yes

basically earning money from someone else

 

[Mephist0pheLes]

short term trading, yes
long term investing, no.

 

[glarerder]

there are people who immediately attempt to do a fresh new calculation at the new oil price can estimate how much % better profits and it feed into a new expected price target .....
many firms doing the same calculation will have varying results and then the market do a tug-o-war as people buy and sell , majority wins at deciding the final price

example if some people think 110 is the fair value .... they see 118 they sell , expecting the price to curl back down in future after initial excitement end ........
then there are people who calculate 124 is fair value .... they see 116 at current time they think got room to grow to 124 so they buy .....
pessimistic vs optimistic
after the tug-o-war it settle at 120 at market close

Looks like it's about who has more capital to buy and sell.

 

[beta93]

buy and hold long term

Long term useless on bad stocks

 

[AngryBirdBird]

no

it means you buy a fraction of a company .... if the company grow it's earnings and future outlook then the value of your fraction pizza slice goes up

different from buying flower or rock then pass to next silly person at higher price

but because this system involve money .... lots of incentive to fake a better outlook to increase the value and pass to next silly person who believe exaggerated claims of "future"

fraction share

 

[Mecisteus]

This is the usual excuse for any losers in the stock market.

Tio boh @Roundtreex ?

 

[Philipkee]

My opinion on stock market

There are broadly two kind of stocks and of cos subsets of one of them

One is the really gambling one and that is crypto. It’s not backed by anything so it can really fluctuate suddenly and by a lot and can go to zero overnight. This one the value, imho, is totally based on emotions

The other one is shares. Not gonna talk about index or funds just the share

shares means u buy a part of the company. They actually go up and down based on emotions and not because of profits or earning imho

For example, u have Tesla share price going up and down based on what Elon musk says or whether he is still close to Trump or not. The actual financial impact is not know but people extrapolate a lot and then either pump or dump based on that but the earnings are still the same. Also, let’s say the assets of the entire company, including money is $1 million and u have 1 million shares, u would reasonably expect each share to be $1 and maybe a bit more if u expect earnings to go up but in reality, its like 30x more.

Think the term is price to book ratio. It’s not too bad for Singapore but a bit extreme for US stocks

Then of cos there a growth and dividend shares

Dividend shares tend not to grow cos they pay out their earnings in dividends like REITs. But if u get the best, shares that pay dividends and grows in a significant value, then you got it. An example of share with growth and dividend would be, imho, Singapore stocks

Growth plus dividends would be like OCBC

Growth plus dividends in significant value would be like PROPNEX

Is it ultimately a zero sum game? I would say for us, it shouldn’t be but unless the company can grow “forever”, eventually there would be a bagholder who loses
everything so in a way, it can be YES.

Like maybe X company stocks keep going up and we buy and sell to next buyer. No one loses. But maybe 100 years later, when the stock price of X is maybe hundred times its value of today (and maybe X really earns so much) but one financial crisis wipes X to bankruptcy, the last person who bought X at a high price loses everything if he can’t offload it (which simply transfers the bag to someone else meaning there is still a bagholder)