who is buying stocks when market crashes [duplicate]

Question

I googled my question but could not find much information, which prompted my posting here in hopes of finding leads on this question.

Today (3/9/2020), US stock markets crashed. Major indexes dropped.

Q1. IF I were to sell my stocks today, who is going to buy them?

Q2. Would stocks become illiquid because everyone wants to sell and no one wants to buy?

Q3. Must companies buy back their shares (when no one else wants to) when investors want to sell

Q4. Is there always someone out there who wants to buy ?

Answer 1

A1. Who is going to buy them? Someone who thinks that the company will eventually recover and has cash they don't have an immediate need for.

A2. Could a stock become illiquid? Yes. Sometimes the outlook for a company becomes so dire and is so widely perceived that all activity dries up. Exchanges regularly kick off companies that can't support a minimum price or level of activity. Some companies go bankrupt and their stock becomes worthless, i.e. nobody will buy it because the company is no longer a functioning business.

A3. Must companies buy back their shares? Nope. Companies may offer to buy back shares, but they typically they do this when the company is flush with cash and has no better use for the cash. It's an alternative to offering a dividend.

A4. Is there always a buyer? No, not as absolute. But bargain hunters will often speculate on deeply troubled companies, buying stock at very low prices, taking a chance on a (very rare) turnaround, or (more commonly) that the company has enough assets to leaving something behind after debts are covered. There are actually investors who specialize in illiquid stocks.

Answer 2

There's always someone buying the dip. That's why the price zigzags. Try to find a case in history where a stock didnt go down and then up and then down. Even in the worst markets they do that. So don't be surprised if tomorrow there's a green day.
Q1. Investors buying the dip. Warren Buffet did this with Delta Airlines a few days back.
Q2. There's always buyers because there are always people day trading the ebs and flows of the market.
Q3. not sure as companies issue stocks for the public. but there's usually not an issue of liquidity if you're trading a stock that has high volume.
Q4. yes but look at the Volume of a stock and make sure it's in hundreds of thousands or millions even better.

Answer 3

The stock market is an auction. For every buyer, there's a seller and it's the net aggregate buying (or selling) volume on one side that moves price. Buyers might be buying because they think that stocks have become undervalued. To a smaller extent, short sellers could be buying in order to close their short positions, booking their gains. So for large cap stocks, there's always a buyer.

Liquid stocks do not become illiquid during market turmoil. Volatility and volume increase in such times. For example, GOOG is trading 2-3x daily volume now that it was trading 3 weeks ago.

Companies are under no obligation to buy back their stocks.

Answer 4

Market-makers buy as the Bid and sell at the Ask. They profit from a volume of the Bid/Ask spread. If their book were to become unbalanced then they would need capital to hedge-with and capital to hold their positions.

So market-makers are inherently short-term traders that tend to stay engaged. A credit-freeze could hurt market-makers. Now the FRB is currently adding funding to the Repo market.