- #1
Jacksilver
- 3
- 0
If the current "Market Price" of a share is 10$ and I manage to find somebody willing to pay 500$ for it, nothing can stop us from transacting at that price.
So, at least in theory, the price is arbitrary. Yet in reality people employ sophisticated techniques of valuating risk vs. gain when investing in a particular company, based on financial (and other) data about the company.
Why bother? : )
A rational explanation for the existing behavior of players in the stock market is that there is a direct connection between your gain from owning the share (not hoping to sell at a higher price) to the actual "financial success of the company".
However, what that connection is - eludes me to this day!
Dividends are one obvious example but not all companies give out dividends.
I know I'm missing something.. Please help me figure it out.
Thanks
So, at least in theory, the price is arbitrary. Yet in reality people employ sophisticated techniques of valuating risk vs. gain when investing in a particular company, based on financial (and other) data about the company.
Why bother? : )
A rational explanation for the existing behavior of players in the stock market is that there is a direct connection between your gain from owning the share (not hoping to sell at a higher price) to the actual "financial success of the company".
However, what that connection is - eludes me to this day!
Dividends are one obvious example but not all companies give out dividends.
I know I'm missing something.. Please help me figure it out.
Thanks