한 달 주식 거래 경험 중 여전히 이해 안 되는 기본 개념 🤔

what

“I’ve been trading stocks FOR A MONTH and there is ONE fundamental thing I don’t understand”

Oh boy…

This is a question that could only be asked in the crypto era. Every asset has a value as determined by what someone else is willing to pay for it. People who own stocks are people who value companies (rather than bitcoin or pokemon cards or spending money on themselves). The type of people who value companies will base what they are willing to pay on what the company is worth. They will have different formulas that determine a company's intrinsic value, and they'll put guesses into those formulas, projecting future performance. The big, institutional players will make their trades based on these types of metrics. Therefore, retail investors like us have to pay attention to those inputs. You can ignore them if you want to, but that will likely lead you to making some bad long-term trades. On any given day, any person can sell a stock for any reason. In the long term, stock prices tend to follow the performance of the company.

The short answer is that "performance metrics often matter to other people, and we all determine the price together."

Every buy has a seller. Every sell has a buyer. It’s a zero sum game

At 4pm eastern every day, the number of buys = the number of sells

Companies that perform well can issue dividends and perform stock buybacks, which further increase share price and shareholder value.

Companies that perform poorly can well… go bankrupt.

>Sorry for a regarded question.

At least you apologized... I mean jesus christ.

Everyone is now dumber after reading whatever that was.

I could very well also be regarded, but I’ve thought about this too. Doesn’t it only depend on how many buy vs sell? What does the companies success have to do do with it?

I love this question

Because it is a legal share of the company. So say Google makes $50 billions this year, and you own some Google stock, you are legally entitled to your share of that profit. How they do with that money depending on shareholder votes, but the actually monetary part you legally own.

Or another very good example of why you want to buy shares of a profitable company: intrinsic value. Basically if the shares drop to a value where it makes sense for a big firm to buy the whole company, they HAVE to buy the shares off your hand. So if the company does better, higher the intrinsic value, thus more benefits to you if you hold shares of that company.

The agreement isn’t arbitrary. The buyers valuation of the stock has to meet the sellers stock valuation or a trade will not be completed. The value of a share (and therefore a stock) is determined by the last completed trade.

You purchase or sell a ‘share’ in a company who’s value is determined by your view of current and future performance (which isn’t guaranteed, hence the bell curve variation of that shares value).

When buyers (or sellers) outweigh the availability of sellers (or buyers), the price of the share moves to recenter around that bell curve. This increase or decrease in demand could be determined by numerous factors, including the company’s performance (or expected future performance), or wider market conditions (macro).

Then add in market makers who act as buffers to facilitate quicker trade fills by arbitrating the tiny price fluctuations.

The word you're looking for is.... Anyway.......

The value is based on how the company is managing their finances. First, there must be a sense of going concern. You do not want to invest in a company that does not have going concern. You want to take a look at their financial statements and see their assets, liabilities, equity.

Revenue is not made up lol. And net income is what you really want to consider. Revenue can be 1 billion but it won't matter if their expenses are 2 billion, for example.

You also need to look at price to earnings ratio and EPS to examine the actual value of the stock. That's why stock priced at 100 P/E is considered expensive value for the share.

Also the value needs to come down to the present value of all future value of cash flows. The company must be able to afford the shares they sell for things like dividends, buy backs, and liquidation. Stock prices are based on company performance because owning a share is a legal claim on real cash

I understand what you are asking. I’ve been wondering the same thing, but it is just really hard to put this question into words. It all really just comes down to money as a whole. A dollar isn’t worth a dollar, it is worth whatever you can buy for a dollar. Try to think about that when you think about this question

No, we do not understand what you mean.

People buy stocks on hopes and dreams. Sometimes those hopes and dreams are based on serious research about the possibilities for the future. Sometimes it’s just based on something they read on Reddit.

A company that has done well, or poorly, in the past might have completely different prospects for the future.

Simplified explanation (a lot of things can go differently)

If company earns good revenue >> it generates more profits >> profit is shared by each shareholders either through dividend or increase in value of the share.

If it was this simple, everyone know what to buy, right?
So people buy in advance, in expectation of future revenue potential.

People get emotional. They buy when a stock climbs, sell when a stock drops. Emotions influence market price more than logic over the short term. Knowing the intrinsic value and buying when the price is below it is key. Over a period of time, a good company making growths YoY will have it's stock follow its performance. You just need to rely on your stomach (not your brain or your heart) to hold when the price drops.

WTF are you talking about?

Oh God .. you sir do not understand anything about the stock market... Please do your homework before you lose money. Stock provides you ownership of a company and people want to own profitable companies. Some do it long term.. some try to do it short term.