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by flakeoil 1214 days ago
If there are 1000000 stocks of a company around and a lot of people want to buy and almost no-one wants to sell. If one person manage to buy 10 stocks from another person at 10% above last days price ($100), i.e. at $110, then the total marked value of that company has increased by 10% to $110 * 1000000 = $110 million. So $10M were created driven by a small transaction of just $110 * 10 = $1100.

It's not that all 1 million stocks have to trade for the total value to go up. All the people who did not trade, but who own the other stocks, have seen their (paper) value go up.

And the same, but opposite happens when it goes down of course.

Let's say some major event would trigger a panic on the stock market, then very few trades could cut the total market by 50% and very few would get any money for their stocks at the price when the panic started. Most would not have sold and would sit on stocks worth 50% less than the day before.

Kind of extreme examples here, but just to show what I believe you are "getting wrong".