Shares

Craggan

Can someone answer this basic question?
Share values are the results of buying and selling, if the stock market has crashed (as recently) many many shareholders have been selling....but WHO has been buying these shares?

dunstonh

Supply and demand. In very simple terms, there is a price where someone is willing to buy. Remember that a lot of the purchases are made by funds. Funds that cannot choose to leave the market when things are bad. Trackers for example will keep buying. Managed funds will see the managers choose what to buy within their fund rules.

Buying doesnt just stop.

purch

but WHO has been buying these shares?

The Market Makers will be "wearing" most of them....which is why the markets continues down as they they sell them on.

That is how the market works

wagdog

Craggan wrote: »

Can someone answer this basic question?
Share values are the results of buying and selling, if the stock market has crashed (as recently) many many shareholders have been selling....but WHO has been buying these shares?

Short sellers have to cover their short positions. It was a lack of sellers and an excess of hedge fund managers with short positions in Volkswagen that sent the share price of VW sky high yesterday making it temporarily the biggest company by capitalisation in the world. This situation can arise when there are way too many traders practising naked short selling. They short a stock without ensuring there actually are enough shares available to settle accounts.

Also, at the end of each month pension funds typically rebalance their exposure, and the dramatic fall in equity value and rise in government bonds might mean they have buy more of the former and off load some of the latter.

And when stock prices fall, it opens the way for bargain hunters. Current market conditions are now a stock picker's dream as the panic selling has figuratively thrown the baby out with the bathwater. If traders can stay clear of price distortions due to major hedge fund deleveraging and cascading margin calls, they can make quite a bit of profit even if index trackers are in a long term secular bear market. From what I understand, picking individual stocks takes a lot of work researching into fundamentals like the assets, health and management of the company behind the stock.

opinions4u

People buy when they think a price is good value.

As the market falls, people jump in at what they believe are opportune moments to pick up a bargain.

Then something else changes sentiment and down it goes in value - suggesting it wasn't such a bargain.

Have you ever bought something in a 20% off sale (a bargain) and then seen the discount doubled later in the week, making your purchase over-priced?


On a very simplistic level I dabbled in HBOS shares.

I saw them slide to 520p. I bought.

They were a bargain. I sold when they went up to 580p. Sexy profit of over 10% in a few days.

I bought again when they dipped under 500p.

I held!

Aaaargh!