Silly question here......... Lets go back about 6 years for this example to seem logical. Say I buy a stock at 50 dollars and the next day it gaps up 50 so I sell it at 100. So I made 50 bucks a share....... Where does the money come from? I didn't think stocks where the same as futures where there is a winner and loser on every trade. Thanks for any answers
In the former case, you are the buyer, and someone has sold you shares (via the stock market, clearing house intermediaries, etc.). In the second case, you are the seller, and someone is buying your shares. If that explanation doesn't work for you, just think of it as buying a pig from someone at a physical market, storing it in the barn overnight, then having someone come and offer you $100 for the same pig the next day. Just be careful not to buy dogs.
I cant believe I am going to answer this question but here goes anyways. You paid $50 for the stock and sold it to a speculator who bought it from you at $100, netting you 50pts. The perception of the stock has changed from 50 to 100 so therefore you are able to profit from this shift.
A Cajun named Jean Paul moved to Texas and bought a donkey from an old farmer for $100.00. The farmer agreed to deliver the donkey the next day. The next day the farmer rove up and said, "Sorry, but I got some bad news. The donkey died." "Well then, just give me my money back." "Cain't do that. I went and spent it already." "OK then, just unload the donkey." "What ya gonna do with em." "I'm gonna raffle him off." "Ya cain't raffle off a dead donkey!" "Sure I can. Watch me. I just won't tell anyone he's dead." A month later the farmer met up with the Cajun and asked, "What happened with the dead donkey?" "I raffled him off. I sold 500 tickets at $2.00 apiece and made a profit of $898.00." "Didn't no one complain?" "Just the guy who won. So I gave him his $2.00 back."
thanks for the answer. i feel a little stupid but was just thinking too deeply about it. oh well. I guess i over complicate things sometimes. thanks for the patience.
The US TReasury prints money as needed. When that jerk pays you 100 for the 50 stock, the Mint prints up a $50 bill to compensate. When the stock goes back to 50, they burn a $50 bill. Sometimes they burn 5 $10 bills. No need to thank me, it's a pubic service.