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Old 03-07-2008, 11:12 PM
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what make people buy a particular stock

what make people want to buy this particular stock. Is there any reason behind why people buy that particular stock?
I mean in expert point of view why make them think that particular stock will grow?
People say that financial statement is important to determine whether a stock will grow but how? I thought the growth of stock is due to supply and demand theory? so how does financial statment relate to the growth of a stock?
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Old 04-07-2008, 12:48 AM
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2 different schools of thought.....financial statements show how well a company is doing. doing better now (and in the past) means the chances of the company doing well (and having a higher stock price) in the future is higher....so people invest in these companies.

of course, this is only one factor, there are many other factors to consider
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Old 05-07-2008, 08:38 PM
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But what I am trying to say is a stock growth is due to supply and demand so why financial statement has to do with its growth?
Ok I will explain what I mean.
Let's say there are 1000 stock of stock A and each cost $1 so every people start to buy and when 1000 stock are sold out and there are still people who want to buy then the stock will grow because currently there are no more stock so I can sell it at a higher price that I had brought. Let say I have 10 stock and I sell it at $1.50 each so $1.50 will be the new price of the stock right which mean the stock had grown by $0.50 this explained the demand is more than the supply so price increase. so now all holders of stock A see the stock grow and begin to sell it away to make money. So now lets assume 900 stock are selling out and only 500 stock are being brought 400 stock cannot be sold so this 400 stock holder will begin to drop their stock price inorder to get rid of it and this explain the supply is more than the demand then price drop.
So is my supply demand concept correct? If yes then my qunestion is if the rise and fall of stock is due to supply and demand then at the first place how do people determine which stock will grow?
Back to financial statement again ok if lets say we look at financial statement of stock A company and find that this company is making money.
So what this company is making money it has nothing to do with us right unless you say that becuase everyone will invest in a company that is making money and it is HUMAN NATURE then I had nothing to say. If not why invest in a company that is making money what does it benefit us if the company make money?

Last edited by realervz : 05-07-2008 at 08:42 PM.
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Old 06-07-2008, 11:37 PM
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yup, it's a simplisitic view of supply and demand, but u're right to say that it's what happens...

as for WHY people buy into a company, it has everything to do with the company's profitability.

The more profits they make, the more we want to invest in them, because the more likely their share price will increase. This could be in the case of big boys like the investment houses and banks wanting a large shareholder stake, or investors wanting dividends from the company's profits, etcetc. All these all result in the buying up of the company's available shares, driving up the prices ala the supply demand example that you quoted
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Old 07-07-2008, 12:36 AM
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Quote:
Originally Posted by want444 View Post
<<The more profits they make, the more we want to invest in them, because the more likely their share price will increase.>>
This could be in the case of big boys like the investment houses and banks wanting a large shareholder stake, or investors wanting dividends from the company's profits, etcetc.
Thanks for your answer but I don't understand why the more profit they make the more likely their share price will increase. As I said the price of share is determine by supply and demand and nothing else right. If lets say company A is making alot of profit but no ones want to buy their share so their share price will remain low right this is what I mean by <<price of share is determine by supply and demand and nothing else>>.
Here you saying that the more profit they make the more likely their share price will increase so you are saying that people like to invest in share that belong to a company that is making money and my question is is this human nature? If you say it is because of dividend then I do not know how to explain why people want to invest in berkshire hathaway stock which is the most expensive stock in the world and they don't give out devidend because warren buffett believe to invest every single dollar of the investor. So what do people gain from that stock?
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