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Questions tagged [stocks]

This tag is to be used for any questions related to Stocks. Ideally they should be accompanied by a country tag if relevant. It is discouraged to ask question about a specific stock. However an example can be used to illustrate a point.

208
votes
21answers
70k views

Why isn't everybody rich?

This question came up after reading this question (stock market long term risks), in which it is re-iterated (as it has been many times on this site), that investing in the stock market, especially an ...
183
votes
13answers
46k views

Why would a company care about the price of its own shares in the stock market?

After a company has issues shares, why should it care if the value of the shares go up and down? Since the shares are now being traded among the public, if the value goes up or down, that is strictly ...
147
votes
10answers
31k views

Do I make money in the stock market from other people losing money?

Basically I am new to stock trading and neglect to see the differences between trading stocks and betting on sports. Basically I am "betting" on which company will do well, and this can change due to "...
124
votes
3answers
475k views

Can someone explain a stock's “bid” vs. “ask” price relative to “current” price?

In my online brokerage account, I want to buy a particular stock and I see the following: Bid: 13.20 x200 Ask: 13.27 x1,000 the current stock price is 13.22. Can someone explain what ...
105
votes
12answers
90k views

In the stock market, why is the “open” price value never the same as previous day's “close”?

This is something that is mind-boggling to me, and it is particularly obvious in candlestick graphs: Why is the open value never the same as the previous day's close value? This is something I just ...
96
votes
7answers
20k views

Why is stock dilution legal?

What I always heard, since I was a child, was that if you own a stock share, you actually own a small share of a company. That seems to be the general consensus of what a stock share is. Well, that ...
95
votes
9answers
12k views

Why should we expect stocks to go up in the long term?

I have read in many personal finance books that stocks are a great investment for the long term, because on average they go up 5-7% every year. This has been true for the last 100 years for the S&...
89
votes
7answers
48k views

Why is the stock market closed on the weekend?

It's all digital and done with computers these days, so why bother? Doesn't that just make the system less liquid, which is the opposite to one aim of having the stock market? Plus can't you just ...
75
votes
10answers
13k views

Why does a company pay dividends at all?

If a company can lower the dividends and even stop paying them at all during hard times, why would they re-install them at all? If I understand correctly a company pays dividends so that investors ...
65
votes
3answers
14k views

How did this day trader lose so much?

I recently read this article about a day trader that lost $100,000: A trader started a GoFundMe page to pay back $100,000 to E-Trade after a disastrous short Please explain this, because I can not ...
60
votes
5answers
15k views

Can a company block a specific person from buying its stock?

Say there is a very rich, very unpopular individual. This individual wishes to buy millions of dollars in stock in a company he or she thinks will be successful. The company, however, realizes that by ...
60
votes
11answers
13k views

Stock market long term risks

This question has been spurred by the following question which was on the 'Hot Network Questions' Is it a lie that you can easily make money passively in the stock market? . The answers to that ...
59
votes
10answers
14k views

Are Index Funds really as good as “experts” claim?

I use the quotations because generally the people touting these the most (John Bogle) are also ones selling the index funds. Being biased doesn't mean they're wrong, but it does mean they may not be ...
57
votes
8answers
86k views

Theoretically, if I bought more than 50% of a company's stocks, will I own the company?

Inspired by this question, I wondered what the implications of owning the majority (> 50%) of a company's stocks are. Will I own said company? Will I be able to call the shots? What if someone was ...
56
votes
14answers
29k views

Is it a lie that you can easily make money passively in the stock market?

People on this site often recommend that investing in an index fund is a good, passive way to make money long-term. But this is clearly not true. Even if we ignore the risk associated with ...
54
votes
4answers
13k views

On paper I have 1 share in my company. How can I sell a smaller percentage of my company to another party?

To be specific, my wife and are equal partners in our limited company. On paper it says we have one share each. We now want to sell 10% of our company to a third party. How does that work in terms of ...
51
votes
9answers
22k views

Investment strategy for Google: What did I do wrong?

Background: I started investing in stocks in October 2017. I have a $22K portfolio which is 60% software, 20% semiconductor, 10% healthcare, 10% others (retail, banking, etc.). It's tech-heavy ...
51
votes
10answers
16k views

One of my stock positions has grown substantially. Should I rebalance my portfolio?

I'm a small beginner investor with less than 50k portfolio. One stock I hold has grown substantially than everything else and makes up 46% of my portfolio, but it is expected to keep growing and has ...
50
votes
4answers
90k views

How does a public company issue new shares without diluting the value held by existing shareholders?

When a public company issues new shares, the total number of shares traded in a secondary market goes up. Assuming there is no change in the fundamentals of the company and the profitability, I would ...
49
votes
6answers
18k views

How can a company use money from stock investors when they are constantly being bought and sold?

I am interested in the mechanisms which a company can use the money that investors give them when they buy a public stock since they are being bought and sold constantly. How can a company spend other ...
48
votes
2answers
14k views

Why did Tesla's stock value drop by 40 USD for just 5 minutes on August 2nd at 3:20pm?

Google Finance reports that Tesla's stock value dropped by 40 USD for 5 minutes on August 2nd, 2018 at 3:20pm What caused such a drop in stock value in the span of 10 minutes?
46
votes
12answers
14k views

Why is day trading considered riskier than long-term trading?

I have read all of these disclaimers about day trading emphasizing how experienced and cautious you have to be. But I don't see how it's any different than buying a stock at a low price and holding on ...
43
votes
18answers
15k views

I carelessly invested in a stock on a spike near the peak price. How can I salvage my investment?

I carelessly invested on stock on a spike (I have been persuaded by a family member) and now my investment value is really low, as you can see below. Is there anyway to salvage my investment for ...
42
votes
12answers
22k views

Can the stock price go up even if no one is buying?

Let's assume there's this random company (XYZ)--that few are aware of--is selling stocks and they're doing really well. If their stock price is at $50 and no one is buying, will it still go up? Do ...
42
votes
6answers
14k views

Can a CEO short his own company?

I'm just curious, it seems a CEO could make a lot of money by shorting a huge amount of shares on his company through a third party and then purposefully tanking the company before being fired. Surely ...
41
votes
13answers
28k views

One of my stocks dropped 40% in 2 days, how should I mentally approach this?

Right after the event, I felt shocked and depressed. I've been engaging in stocks for about a year now but I've never encountered such a big jump in such a short time. What I'm planning to do is just ...
41
votes
9answers
10k views

Why do stock prices of retailers not surge during the holidays?

My six-year-old (!) son asked me this question and I didn't have an answer, so I told him I'd get back to him. He asked why people don't buy a large number of shares of a company before the holiday ...
40
votes
6answers
12k views

What stops management from just “compensating” themselves by taking all the stock in a company?

One of the odd things about a lot of modern companies is that the management, meaning the senior officers (CEO, CFO, CTO, etc) can pay themselves in stock. For example, Square's Jack Dorsey pays ...
39
votes
5answers
8k views

How to report $27 in cap gains affordably

I'm preparing my taxes using TurboTax's basic free tier. Last year I had $26.62 in realized long term capital gains. To report this using TurboTax, I need Premier, which is a $54 add on. Even in a ...
39
votes
4answers
9k views

How to profit off a stock price falling

How would one profit from a share price falling, granted that they correctly predicted it would happen? Say I had a hunch that a certain stock was going to fall next week, how could I effectively ...
39
votes
10answers
41k views

Options for dummies. Can you explain how puts & calls work, simply?

I never understood Puts or Calls. Could anybody explain it like I were a child?
37
votes
10answers
8k views

Should a high-school student invest their (relative meager) savings?

I am a high school student, I don't really have much money, between one and two grand in my savings account. However, I have friends who are investing in both penny stocks and stocks. I do not really ...
36
votes
9answers
15k views

Is it legal to “mine” dividends?

Dividends are paid to share holders based on ownership of shares before the “ex-dividends” date. Example: Stock A has an ex-date of July 1st Stock B has an ex-date of July 15th ...
36
votes
4answers
8k views

What prevents stock prices from being artificially increased?

Let's say company FOO is trying to increase their $20 stock price. They agree to sell a share for $100. Of course, nobody buys. Now their buddy buys the share for $100. And maybe sells it back for ...
36
votes
8answers
18k views

Why do people buy stocks that pay no dividend?

Before recently, Apple Inc. did not give dividend to shareholders. This makes me curious why people buy Apple Inc. stocks; while it might be due to the expectation of selling stocks at a higher price,...
35
votes
7answers
10k views

Why is it rational to pay out a dividend?

Imagine a mature company, which has stable earnings and made a profit this year. The company is planing to pay out a part of this earnings to its shareholders. Assuming the stock price goes down ...
33
votes
3answers
7k views

Why does demand for stock rise when a company appears to have high future value?

So a company decides to raise money by selling shares of its stock. The stock is offered at an initial price of their determination. The stock is then traded in a market where forces of supply and ...
33
votes
2answers
3k views

What happened to Home Depot's Stock in 1988?

I was exploring various stocks this morning on Google Finance, and I came across some strange behavior for Home Depot (HD) in 1988. For the entire year, the stock traded incredibly low, and at ...
32
votes
7answers
17k views

Bought stock at higher price than current price

I wanted to buy stock ABCD at a price of 880. The current price was 900. When I bought, I set 980 instead of 880 and it was fully executed. I don't understand how it is possible to buy stock at a ...
32
votes
1answer
4k views

Dividend Payments - Am I entitled?

Suppose I own 100 stocks in a company listed on the LSE. I purchased these shares through an online broker some time around the 1st of November 2016. Looking up the dividend dates of the company using ...
31
votes
5answers
5k views

ESPP--any reason not to go all in?

I'm just finishing up paying off my student loans (woohoo!) and am starting to look at places I can put my money to make it work for me. I've read Kobliner's Get a Financial Life and am interested in ...
31
votes
2answers
9k views

Is my stock gone forever from a reverse split / bought by another company?

I'm a complete novice in regards to investing and had purchased some shares of OXIS from TD Ameritrade back in March of 2015 (NASDAQ). The company (OXIS International) became very devalued and did a "...
30
votes
9answers
9k views

How can a resident of the European Union (not from UK) practically buy stocks? [closed]

I'd like to buy a little amount (say, 5000 €) of stocks. I know it's risky, especially for an absolute beginner like me. Maybe you would like to persuade me to start with stuff such as such as mutual ...
30
votes
7answers
2k views

Shares; are they really only for the rich/investors?

I've always been under the impression, that if you want to be a player in the "shares game" you either have to be an full time investor, or someone who has a lot of money to play with. Is this true? ...
30
votes
2answers
26k views

Difference between GOOGL and GOOG

Why are there two ticker symbols for Google — GOOGL and GOOG? They seem to be mostly identical, but their market values are different: currently, 551.64 for GOOGL and 548.79 for GOOG.
29
votes
5answers
17k views

If I have $1000 to invest in penny stocks online, should I diversify risk and invest in many of them or should I invest in just in one?

I have $1000 to invest. I use Scottrade to invest in penny stocks online, they charge $7 to buy a stock and another $7 to sell it ($14 in total). Given the high volatility of these stocks, what tactic ...
29
votes
4answers
5k views

How does high frequency trading work if money isn't available for 2-3 days after selling?

Do companies that perform high frequency trades just have large enough money pool, or do they get money back quickly somehow?
29
votes
3answers
959 views

What are “preferred” stocks? How are they different from normal (common) stocks?

What are "preferred" stocks? How are they different from normal (common) stocks that you can buy on a stock exchange?
28
votes
12answers
17k views

Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”?

I have a 10 stock portfolio and considering market conditions that are on the rise when this question in being asked, a few of them did hit their 52-week high price. I would like to call myself a ...
28
votes
8answers
6k views

Can a casual investor effectively predict the direction of the stock market?

Is the stock market an efficient market, with assets whose direction of change in prices cannot be predicted by casual investors? The reason I'm asking this is because certain family members are ...