265

In my opinion the ability to have wealth comes down to one thing: Behavior. For many it is a tough pill to swallow, but once a person realizes that they have control over their financial future they can then act accordingly. However, many are stuck blaming some bogey man to retain the ability to behave how they wish. There are countless examples of ...


254

This is clearly not the answer you’re looking for, but you went wrong by trying to pick stocks and time the market. It’s been shown to be a fool’s game. Furthermore: if you picked several stocks, and think you did something wrong because one of them went down, then you have some rough days ahead of you. There will be long stretches where most or all of ...


248

It all comes down to 2 things: Financial illiteracy Insufficient initial capital For the first point, a very low number of people even possess basic knowledge of finance. If you don't know any better and learning basic economic concepts is disregarded throughout your upbringing (be it in education or parenting), then it's highly unlikely for you to ...


140

Because you have to be rich to get rich! Let's set up a model calculation. (don´t get hung up on these numbers - do your own calculations with your own goals and premises!) I define be rich as owning $1 million Average return on your funds 7% Say from age 0-10 you get some money from your family, because you are lucky, and your parents put it an an ...


114

I assume you are talking about a publicly traded company listed on a major stock exchange and the buyer resides in the US. (Private companies and non-US locations can change the rules really a lot.) The short answer is no, because the company does not own the stock, various investors do. Each investor has to make an individual decision to sell or not sell. ...


107

Instead of stocks, let’s apply this logic to houses. Houses are expensive. However, if I buy a house at a high price, I’m okay if I can sell it for more than I bought it for at some point in the future. As long as the prices continue to climb, everyone is happy, right? So let’s decide to make a law that says that a house can never go down in value; ...


105

Because “rich” is a result of an uneven distribution of wealth. Last I researched, the total US wealth divided by the total population resulted in $160K/person. $320K/couple is not rich. The median wealth number is far lower than this to offset those with millions, and of course, billions. This is how we get to the articles that mention how the top few ...


97

Fundamentally, I think there's a high level (and perhaps unsatisfying) answer to this. It's because that's not "banking" as a business, and a bank is established to do banking, not to get into the stock market. In other words, this question strikes me about the same as asking, why don't ice cream shops stop selling ice cream, and instead get in the ...


96

The day trader in the article was engaging in short selling. Short selling is a technique used to profit when a stock goes down. The investor borrows shares of a stock from someone else and sells them. After the stock price goes down, the investor buys the shares back and returns them, pocketing the difference. As the day trader in the article found out, ...


90

Market reactions to information are not always timely, proportional, or rational. We don't know the full impact of our current situation; we're feeling it out. Some people (bulls), believe that the initial dip was an over-reaction, that the government response will prevent further decline, and/or that things will go back to normal pretty quickly, so they ...


76

"Systemic and well know patterns in sales" are priced in to the security. Typically companies with very cyclical earnings like this will issue guidance of earnings per share within a range. These expected earnings are priced in before the earnings are actually booked. If a company meets these expectations the stock will likely stay relatively flat. If ...


73

In a more liquid stock, like say Apple or Google, this is pretty difficult to achieve. That is because there are so many more actors trading the stock than simply Manipulator A and B. Naturally, more transactions and volume leads to a more transparent "equilibrium" price. The scenario you posited is very possible in less liquid stocks. Manipulators have ...


62

It's tech-heavy because I am a tech guy and I always feel comfortable investing in a tech company. First, no you do not feel comfortable. You invested in an incredibly volatile company in a volatile industry and you're complaining about it on the internet to strangers in just a couple of months after investing when you've hit a relatively small decline. Re-...


61

Why can't we create a self-fulfilling prophecy of optimism in the market, thus benefiting everyone with investments in the stock market? Because a stock market is not a magic money-printing machine. Whenever you sell a stock, that money comes from the person who bought that stock. The whole system can't generate more money than people put into it. To ...


59

First of all, "rich" is not an absolute term, but relative. Compared to people a thousand years ago, we are all fabulously rich - we possess invaluable boons such as modern medicine, electricity, cars, industrial machines, the internet, advanced education, and so on. Actually, even within our time, even the poor people in first world countries are rich ...


58

It's worth noting that Warren Buffet is a value investor, not a trader. As such, it doesn't tell you much about technical analysis or trend following. Instead, he's implying that when the market gets overly excited (overvalued) or panics (undervalued), there are opportunities for long-term profits, assuming you do your due diligence and have an opinion of ...


58

The market reacts only to new information. It is already known that the new coronavirus has resulted in a pandemic. It was known long before the current situation. Having infections in most countries, and knowing the growth is exponential is enough. Not all people understand the power of exponential growth and how quickly its rate increases. Yet, there are ...


56

Large profits in day trading are made via buying stock in volume not large rises in price. If you buy 100000 shares of stock and it rises by $10 (or whatever currency) then you sell for a large profit. If you do not have the money to buy in volume and aren't willing to assume a large amount of risk, I'd recommend against day trading.


53

Is the stock market an efficient market, with assets whose direction of change in prices cannot be predicted by casual investors? Predicting the direction of the market, and prices, is easy. I'll do it right now: "The market will go up." Looking at the S&P 500, for 26 of the last 31 years, I would've been correct. This is, in fact, the idea behind ...


52

No, a jump in market capitalization does not equal the amount that has been invested. Market cap is simply the stock price times the total number of shares. This represents a theoretical value of the company. I say "theoretical" because the company might not be able to be sold for that at all. The quoted stock price is simply what the last buyer and ...


51

No, your billionaire premise is not correct. Most people don't realize that share price drops by the exact amount of the dividend on the ex-dividend date when the stock exchanges adjust the closing price. If you have a $100 stock that is going ex-dividend tomorrow morning for $1, in the morning the adjusted close will be $99. IOW, you will incur a ...


47

A great deal of analysis on this question relies on misunderstandings of the market or noticing trends that happened at the same time but were not caused by each other. Without knowing your view, I'll just give the basic idea. The amount of active management is self-correcting. The reason people have moved out of actively managed funds is that the funds ...


45

Unissued capital is only a token restriction. When a company is incorporated a maximum number of shares is specified in the legal documentation. Most companies will make this an extremely large number so they never face that limitation. See here. You wouldn't necessarily expect the stock price to change. The reason a company issues new stock is as a way to ...


43

In the US, "Traditional" retirement accounts are generally subjected to something called Required Minimum Distributions (RMDs). For clarity, a "traditional" account is one where there is a tax benefit confered on contribution to the account, but distributions from the account are subject to tax. RMDs exist to force taxable events on these retirement-type ...


40

Your shares represent partial ownership of the company. You get dividends when the company transfers some of its profits to its owners. When the company is sold, it will usually be for some combination of cash and shares in the company making the purchase. You will receive your share of that cash and shares in proportion to your ownership interest.


39

The answer to this question depends heavily on your ability to accurately predict a recession. Hypothetically speaking, if you were 100% accurate with your prediction, the obvious choice would be to sell your stocks. You would avoid all of the downside, which would allow you to invest your money elsewhere and/or maximize your reentry when the market turns ...


38

Short-term fluctuations are more significant than they might seem because: They are not as small in relation to long-term returns as one might expect. For Brownian motion (random walk) the typical move over a given time interval scales only weakly, with the square root of the time interval. So a really bad day can wipe out a whole year's return. They are ...


37

Most people have a high discount rate for their own money, meaning that they would rather have $1 now than $2 in five years’ time. Given such a high discount rate, there’s no point in saving, because no investment is likely to have such a high rate of return. They might well be richer in the long term if they used a lower discount rate, but they’re more ...


36

A couple of possible reasons: A disproportionate amount of stock-market risk (e.g., scheduled economic and earnings releases) happens outside market hours, with the goal of avoiding destabilization of the market. (Extended-hours and futures trading are typically occurring, and show the immediate impact, but the regular-hours SPY does not.) Thus, overnight ...


35

Most "billionaires" have their wealth in companies that they grew into multi-billion dollar entities that they own a significant portion of. If the government then says "you own too much - you must give us 6% of what you own", then they likely don't have enough liquid assets (cash) to pay that bill, so they will be forced to sell shares of that company (or ...


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