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26 votes

Why do people who sell something on a marketplace ever allow the price to go down?

Because what if nobody wants to buy at that price any more? When the buy price and the sale price meet, a transaction happens, and those prices are removed from the market. That means there's always a ...
Quitting Due To Antisemitism's user avatar
16 votes

Why do people who sell something on a marketplace ever allow the price to go down?

Just because one buyer was willing to pay $X doesn't necessarily mean other buyers will as well. Maybe that first buyer isn't interested in buying any more since he already has what he wants. If you ...
Steve-O's user avatar
  • 1,127
13 votes

Why does a call option's price increase with higher volatility?

I agree that high volatility just means the underlying stock price fluctuates more, and it does not imply if the stock is going up or down. But a high volatility in the price of an underlying also ...
Nam San's user avatar
  • 231
12 votes
Accepted

Does the assumption that all known facts are already priced into the share price assume that most participants of the stock market are well-informed?

Individual Investors are a Minority Institutional investors own about 80% of the stock market, leaving retail investors as the remaining 20%. Since their day job is investing, institutional investors ...
codeMonkey's user avatar
  • 1,639
11 votes

compromise between 100% insurance and no insurance? (long term view)

I think you are addressing it the wrong way around. Insurance - in its basic idea - is supposed to protect you from exceptional and potentially life-changing financial situations; not from day-to-day ...
Aganju's user avatar
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10 votes

Does the assumption that all known facts are already priced into the share price assume that most participants of the stock market are well-informed?

If enough (e.g. one third) are not well-informed, wouldn’t that imply that the other two thirds could earn money by buying / selling stocks to the other third which would lose that money? Where do ...
mhoran_psprep's user avatar
9 votes

What is meant by "priced in"?

I think the first misconception to clear up is that you are implying the price of a stock is set by a specific person. It is not. The price of a stock is equal to the value that someone most recently ...
Grade 'Eh' Bacon's user avatar
6 votes
Accepted

What is meant by "priced in"?

Anyone who wants to can use any method they want. Ultimately, the price of the stock will settle on the valuation that people tend to agree on. If you think the priced in numbers are too low, buy the ...
David Schwartz's user avatar
6 votes
Accepted

Why doesn't the market capitalization of a company match its acquisition price during a takeover?

Short answer: google finance's market cap calculation is nonstandard (a.k.a. wrong). The standard way of computing the market capitalization of a firm is to take the price of its common stock and ...
farnsy's user avatar
  • 15.1k
5 votes

Why do people who sell something on a marketplace ever allow the price to go down?

Pricing is a complex art, and there are a lot of non-intuitive aspects to it. Here's a real-world example that might help (examples use normal products, but the concepts are generally the same for ...
bta's user avatar
  • 2,557
5 votes

Financial astrology: How do the movements of celestial objects affect the stock market?

I don't like to reference other answers In my answer, but there was one item that stood out in the other answer: Hulbert rated Crawford the country’s top stock market timer a number of times with his ...
mhoran_psprep's user avatar
5 votes

Why does the iShares EEM ETF have a higher expense ratio than similar ETFs like VWO?

Answer from Phillip is correct. I want to add that there are total 807 million shares outstanding fr EEM and turn over is 16% or Average Volume is 66 millions shares per day. So each EEM is changing ...
riya's user avatar
  • 1,245
4 votes

Financial astrology: How do the movements of celestial objects affect the stock market?

I think that the idea of the stock market and astrology is a steaming load of mumbo jumbo. And yet... The Hulbert Financial Digest has been tracking the performance of investment advisory ...
Bob Baerker's user avatar
  • 76.6k
4 votes

How come stock price increase doesn't result in a volume increase as well?

A stock price increase does not necessarily mean that more people are buying. Whenever a stock is sold, there is a buyer and a seller. So everyday the number of shares bought and the number of ...
Ben Miller's user avatar
  • 116k
4 votes

Does the assumption that all known facts are already priced into the share price assume that most participants of the stock market are well-informed?

Not being well informed does not automatically mean willing to pay stupid prices. If you tried to take advantage of this, they'd just buy from all the people who were willing to sell at more ...
keshlam's user avatar
  • 47.5k
3 votes

What is meant by "priced in"?

"Priced in" just means that the speaker thinks the current price has already taken that factor into account. For example, the difference in price right before and right after a dividend is ...
keshlam's user avatar
  • 47.5k
3 votes
Accepted

Why does the iShares EEM ETF have a higher expense ratio than similar ETFs like VWO?

This is a product of a few factors: EEM is very liquid, while it has just under half the assets under management of VWO (35b vs 65b) it has a daily volume nearly 5x higher than VWO (2.5bn vs ~500m) ...
Philip's user avatar
  • 5,768
3 votes
Accepted

Best way to determine price of an asset based on set of seller and buyer offers?

Price is a double-sided market. It's the bid for buyers and the ask for sellers. A trade occurs when a trader crosses the spread, meaning that a buyer is willing to pay the seller's price (he buys at ...
Bob Baerker's user avatar
  • 76.6k
2 votes

Financial astrology: How do the movements of celestial objects affect the stock market?

Before going into the financial astrology aspect, you have to step back and look at whether astrology in general works i.e., is there any scientifically sound research work. I have not found any. ...
Canute S's user avatar
  • 191
2 votes

Competitive Market Analysis when have to extrapolate price per acre and price per square foot of building?

Your model is too simple. You aren't considering: Location. Differences in location of a few miles can have a significant difference in home prices. It can make a difference in schools, community ...
mhoran_psprep's user avatar
2 votes
Accepted

Competitive Market Analysis when have to extrapolate price per acre and price per square foot of building?

If we assume that your equations are a match for reality (the primary drivers of the price are the size of the home and the size of the lot and that the price is a linear function of both home size ...
Justin Cave's user avatar
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2 votes
Accepted

How are market rallies "fueled by sellers", and market sell-offs "fueled by buyers"?

Halsey has it wrong. Does he live on Htrae (Bizarro World) where everything is backwards? As you noted, From my own understanding of supply and demand, markets continue to rally because they are ...
Bob Baerker's user avatar
  • 76.6k
2 votes
Accepted

Price discovery and index funds bubble

Price discovery is enough number of traders who study fundamentals and influence the price. Index funds and large diversified funds work on pre defined algorithms... There is some decision making in ...
Dheer's user avatar
  • 57.1k
2 votes
Accepted

Order Book - Does the price (ask or bid) depend on the size of the order?

Let's start by saying that there are no hidden orders or inside quotes and that the order book is as you displayed it. If a quote is taken out via execution, price moves to the next best price in the ...
Bob Baerker's user avatar
  • 76.6k
2 votes

Why does the iShares EEM ETF have a higher expense ratio than similar ETFs like VWO?

Sorry I misread the question, updated my answers below. Benchmarks EEM(iShares): follows MSCI index. VWO (Vangaurd): follows FTSE EM all cap index A comparison table for easy reference: https:...
Thinkerer's user avatar
  • 129
2 votes

Why do people who sell something on a marketplace ever allow the price to go down?

If a seller shouldn't offer to sell at a price lower than the highest price anyone has ever paid, doesn't it follow that a buyer shouldn't offer to buy at a price higher than the lowest price anyone ...
Acccumulation's user avatar
2 votes

Is there a way to tell what price a stock will be before the market opens?

If the stock is traded internationally, you might have a look on exchanges which might be open.
glglgl's user avatar
  • 5,415
2 votes

Rationale behind market weighting in ETFs / indices

Weighting by market cap ensures that larger companies (which naturally are a larger part of the economy) have higher representation, making the index more representative of the economy (or sector) ...
D Stanley's user avatar
  • 136k
2 votes

Does the assumption that all known facts are already priced into the share price assume that most participants of the stock market are well-informed?

One can answer your final question indirectly. The not well-informed investors would probably mostly be individuals with small investments so measuring their performance directly is hard. However, if ...
quarague's user avatar
  • 1,210
1 vote

Is there a way to tell what price a stock will be before the market opens?

The price of a stock is a function of buying pressure versus selling pressure. More buying pressure than selling pressure and price rises (and vice versa). There is no way to know what the above will ...
Bob Baerker's user avatar
  • 76.6k

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