25

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 gap between the highest buy price and the lowest sell price. No more trading happens until someone decides to increase the buy price or decrease the sell price....


14

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 don't mind waiting, potentially quite a long time, then you can feel free to leave your selling price at $X, or even increase it. But if you need the product ...


13

Understanding the BS equation is not needed. What is needed is an understanding of the bell curve. You seem to understand volatility. 68% of the time an event will fall inside one standard deviation. 16% of the time it will be higher, 16%, lower. Now, if my $100 stock has a STD of $10, there's a 16% chance it will trade above $110. But if the STD is $5, the ...


12

I don't know how many people "a ton" is, but if you are getting more than, say, 6 people who are qualified to rent, you've priced it too low. Better to ask for $1200, and have a potential tenant haggle or ask you to reduce the price than to have 6 people want it for $900. It's worth it to run a credit report, and let that help you choose. I agree with ...


11

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 cost. That means that covering the first 1000 $ is pretty much useless; for any serious sickness the insurance would be without merit. For example, it makes ...


11

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 means that there is a higher chance that the underlying price could reach extreme prices (albeit in either direction). However, if you purchased a call option ...


8

I wouldn't start a bidding war if I were you. Sometimes you may get potentially bad tenants who cannot find a property anywhere else offering more money just to get in a place. If you know nothing else about these people how can you guarantee they will keep paying the rent once they get in. The things you should be doing is checking the prospective tenant's ...


8

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 traded at. If Apple last traded at $100/share, then Apple shares are worth $100. If good news about Apple hits the market and people holding the shares ask for ...


6

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 multiply by the number of outstanding common stock shares. If you do this using the numbers from google's site you get around $13.4B. This can be verified by ...


5

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 newsletters for 40 years. It was acquired by CBS MarketWatch and then acquired by Dow Jones and renamed MarketWatch. I remember it from the 80's, before the internet. It'...


5

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 hand every 12 days on an average. And same is not true for VWO . For VWO it is 1.51B/14.15M ~=100+ days.


5

When volatility is higher, the option is more likely to end up in-the-money. Moreover, when it ends up in-the-money, it is likely to be over the strike price by a greater amount. Consider a call option. With high volatility, moves in the stock price are big - both up moves and down moves. If the stock moves up by a lot, the call option holder will benefit ...


4

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 stock as that would mean that its price will go up as the future earnings materialize. If you think it's too high, short the stock, as its price will go down as ...


4

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 shares sold are equal to each other. The volume represents the number of shares that have changed hands during the day. The stock price represents the price at ...


4

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 investments like bitcoin). A certain PC video game retailed for around $50. This game was rather popular, sold well, and was one of the main moneymakers for the ...


3

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) and very tight spreads, so if you are looking to enter and exit big positions frequently at good prices it is much easier to do so. It also has a very deep and ...


2

"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 released often differ exactly by that dividend -- the fact that the dividend would function as a "relate" on the purchase price was priced into the earlier quote, and its ...


2

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. Secondly, and more importantly, people who do this kind of stuff (forecasting stock prices based on astrology) are very shady. Even if there was someone who can do ...


2

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 amenities, commuting. Being in the location with desirable name can cost more. View can also factor into the value of the land. Quality of the materials. Price per ...


2

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 and lot size), then you've got 3 equations and 2 variables so there are plenty of techniques to come up with an approximate solution. The simplest and most ...


2

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 large diversified funds, but as fund manager can't monitor every share, in reality only small percentage of shares are actively managed by the fund manager... ...


2

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 order book. If you place a market order to buy 1,000 shares, you'll get filled with 500 at $1.00 and 500 at $1.01 as you specified. If it's a limit order ...


2

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://etfdb.com/tool/etf-comparison/EEM-VWO/ EEM was one of the earliest EM-focused ETF and debuted in 2003 with its reasonably attractive fees then. However, ...


2

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 biggest win in 2008 when he called the pending crash. He was the top performing stock market timer for the five year period through 1995. there was a comment ...


2

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 fueled by buyers (willing to pay higher prices) at highs, and markets will stop making new highs when the very last of the bulls turn bearish (i.e. unwilling to ...


2

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 has sold at? If everyone followed those rules, no sales will ever occur. Suppose you're at an auction selling a baseball card. One person bids $100, then someone ...


1

tl;dr: You can make money using financial astrology. You might even beat the market with it. My father is a physicist. He spent much of his career analyzing data, and when I was a kid he showed me how he could take pretty much any set of linear (non-random) data points, and he could find an equation that would yield those points. I once asked, "But is ...


1

Your final point is the most important factor in this discussion, and one that is often overlooked. Changes in prices, and hence price discovery, are driven by trades, not by volume of ownership. Obviously, someone who's merely owned shares in a company for the last decade (without buying or selling more) has not participated in setting the price of the ...


Only top voted, non community-wiki answers of a minimum length are eligible