Stock investing question.

**david90** · 07-31-2007 03:12 AM

This is a hypothetical question.

If a company reported that their profit went up by 100% but there aren't any buying or selling of the company's stock, will the stock price increase?

From my understanding of the stock market, if the company doesn't payout dividend then investor is just making money off of each other by changing the supply and demand of the stock. Investors aren't making money directly from the company's profit but from the short supply of stocks created by other investors buying them.

Does this mean that investors are screwing and taking money from each others? If this is the case then I don't see the point in owning stock.

**akula** · 07-31-2007 04:21 AM

Originally Posted by david90

This is a hypothetical question.

If a company reported that their profit went up by 100% but there aren't any buying or selling of the company's stock, will the stock price increase?

From my understanding of the stock market, if the company doesn't payout dividend then investor is just making money off of each other by changing the supply and demand of the stock. Investors aren't making money directly from the company's profit but from the short supply of stocks created by other investors buying them.

Does this mean that investors are screwing and taking money from each others? If this is the case then I don't see the point in owning stock.

no, if the trading volume is zero, the quoted price won't change

yes, the trading in the secondary market is a game of musical chairs played by the greater fools

yes, there is no "point in owning stock"

**silversurfer** · 08-03-2007 09:17 AM

There are lots of places other than here to review how the stock market works.

I was lucky (or prescient) to take an Economics class in high school. It served me well.

you are correct, if the company doesn't pay a dividend then you only get money by selling stocks to others. this is called the "greater fool" theory. It's very well known. It's not news.

you will be much better off starting a company and going public, awarding yourself stock, than you will by buying another company's stock and watching it rise. I made something like 18% across all my stock investments from 6/06 to 6/07. There's definitely money to be made, but... I'm a big fan of dividends. I bought stock that produces 7% dividends. I watched that stock go from around $9 to $10.50 while I owned it. nice safe bet. owned it for 5 years.