>They can buy it back and put it out at their discretion, but don't they SELL the stock to the market makers
no! That only happens at the Initial Public Offering,
or perhaps if they register for a Secondary direct offering.
All else is just the secondary market. If a stock is
widely traded, there is a potential for the company to
register and sell a bit more to get money. AETH did
this with great elan at its peak, to reel in $1B cash -
since its initial IPO brought in far less, and the
stock was bid up to extreme heights of $300, or tens of
billions in valuation. Stock is also a currency they can use to buy other companies. That, and the personal wealth of the officers who hold shares, are the reasons they
like higher prices.
The notion that a company is "worth" its stock price times
the number of outstanding shares is a fiction, a confection, a rule of thumb to use for speculation.
Think - what would happen if the company suddenly decided to
sell all its shares at that current price...? the price
would go to zero. Consider - if there were no other buyers and sellers, you and I alone could agree to trade CMGI back up to $200 with just 100 shares... does that mean the
company would really be worth 100x what it is now? nope.
>"What CAUSES those directions? The weather?"
Many things. Weather/seasons - i.e., tax selling.
Economic cycles. International tensions.
As to the notion that shorts profit from others' loss -
??? I could just as easily say that longs are bad
because they profit when shorts lose. But then,
even if no short trades were allowed, some longs
profit at the expense of others who sell at a loss -
that's the way it has to be; it's not like prices
go up infinitely by majik and everyone profits...??
>Have I been a riverboat gambler for forty years??????
what were you thinking?
MfN |
