# Tag Info

22

It's not clear what level of answer you're looking for, so here is a much more basic answer. There are indeed many exchanges with many different prices. However, if you have noticed that you could make money by exchanging your BTC for USD, exchanging the USD for SEK, and then exchanging the SEK for slightly more BTC than you started with - then someone else ...

9

I won’t discuss the fundamental reasons why stock prices change (discussed in another answer), but the mechanics (roughly) work like this. (Real world is more complex, since there are multiple exchanges, and high frequency trading.) An exchange matches orders from buyers and sellers. The sensible way of making an order is to put a limit price on it. So you ...

8

Economic analysis always requires making some assumptions at some point. The assumptions that you make should try to fit reality the best that they can. Regarding your specific situation, there is a term in economics that might be helpful in describing what's going on: "Market Segmentation." This is a topic that is often studied in the asset ...

7

As mentioned in the other answer, the amount of money does not have to correspond to the total value of all assets in the economy. However, there is some correspondence that is not mentioned in the other answer so I will focus on that. First, there should always be enough money in the economy so people can carry all the transactions they want. If that is not ...

6

Disclaimer: There are a lot of interesting aspects to this question. Shareholder voting rights, control over the company, etc. are all interesting things to consider. Here, I only focus on a few parts of the question. Excess Volatility Claim: Are actual stock prices much too volatile to be explained by dividends? Is this evidence that the price of a stock ...

6

In stock market price is determined directly by supply and demand interacting in a way that is somewhat similar to haggling in traditional physical markets. Buyers will offer their bids for a stock (i.e. they will state for which price they are willing to buy a stock). At the same time sellers will have their ask price (i.e. they will state the price for ...

5

This question is likely to go stale pretty fast, for two reasons. First, ownership and control of companies is always subject to change; and second, market capitalization can also show substantial swings from quarter to quarter (see Apple's valuation at \$835 billion in Q1 2019 vs \$1,305 billion in Q4 2019 for just one example). I'm writing this in June ...

5

Increases in the money supply do not affect the real value of investments unless they lead to inflationary increases in the (quality-adjusted) prices of goods and services. Which this increase has not done. If you choose to measure the value of your investment as the proportion of the M1 money supply that it represents then sure, it has been devalued, but ...

5

tl;dr Yes, investing into stock market has positive impact on growth. First, before going any further, investing into stocks is from an economic perspective just a form of saving. Consequently, following the literature this answer will be repeatedly referring to saving in general. In economics, there are two main theories of economic growth. An exogenous ...

4

The Fed funds rate is the rate at which commercial banks can borrow reserves on the overnight market (see this explanation at Investopedia). As such it affects all other interest rates banks charge since when they can borrow more cheaply they can also lend money cheaply to consumers. This affects among others also student loans (when they are provided by ...

4

There are not a lot of studies on this topic. There were studies in the 70s that would tend to disconfirm the idea of technical analysis as it was proposed at the time. The studies generated random sequences of numbers in a time series and had technical analysts then make decisions believing that the time series were real time series. They didn't detect ...

3

Yes, price will decrease. If nobody wants to buy at lower prices, sell orders will push stock prices toward zero. This is possible in periods of financial turbulence, especially for companies that are very exposed to uncertainty and have do not have positive financial results to show to investors. If you are interested in exploring this topic, I suggest ...

3

The context in which you're asking the question is empirical market microstructure, where the market place is really the limit order book, evolving at high frequency. At this level of market resolution, "price" has no meaning without further specification, and latency matters. There are multiple prices in a limit order book, all evolving at micro-...

3

This was most likely reference to the Fisher hypothesis. As argued by Engsted & Tanggaard (2002): classical economic theory, especially the Fisher hypothesis, according to which expected nominal asset returns move one-for-one with expected inflation such that expected real returns are independent of expected inflation. A related implication is that ...

3

Declaring bankruptcy is a step taken by companies to get protection from creditors. (They cannot seize collateral unilaterally, etc.) The company can still operate, within the legal framework, and with the obvious limitation that nobody wants to be owed money by the firm. Although equity often ends up worthless after all creditors have their claims settled, ...

3

The total value of assets can exceed the total amount of cash or money in accounts. For example, suppose we live in an economy with exactly as much money as assets (say, 100 trillion). I then produce, at my home, a masterpiece of art from common materials, akin to the Mona Lisa. Appraisers and others assess it at 1 trillion dollars. There does not need to ...

3

Yes, Fed sends all its profit including the ones it earns on government debt back to the treasury (this was already answered on this site here). Fed can create an unlimited amount of money by buying treasuries but not because of the interest payments but because of the debt itself. The interest payments themselves do not generate new money in this ...

3

I think asking people for a list here may lead to sample bias or a small sample set. If you want a more replicable approach, you could simply take the top influencers based on followers or retweets on social media platforms like Twitter, Stocktwits, etc.

3

Yes they do in in a several ways. The main ones are: Trading (not just of the people who actively manage the EFT but generally) helps price discovery. Price discovery is an important role of stock market. It is socially beneficial for companies to be appropriately priced given their fundamentals and all other avaiable information as that helps divert ...

3

If a sufficient fraction of market participants follow technical analysis it can work as self-fulfilling prophecy. If some pattern occurs that technical analysis interprets as signalling an imminent drop in prices these people will sell, which will cause the prices to actually drop. As is obvious from the above argument, whether an interpretation of the data ...

3

I typed "shareholders of record" into Google, and I got Stockholder of Record Also known as shareholder of record, record holder or owner, or registered holder, or owner. The stockholder whose name is listed on the company's books and records as the owner of shares as of a particular date (the record date). A stockholder of record holds stock in a ...

2

You can't really estimate stock prices this way because it's forward looking (i.e. it considers the future, not so much the past). Example: Suppose company A lost \$100 million this year, but next year it's going to earn \$100 million. How much is company A worth? If you naively used the P/FCF ratio (price-to-free-cash-flow) you would value company A as ...

2

You seem to be conflating wealth and income. If I am let go from my job, my work income is gone, but not my wealth or my capital income. While most people only have a small amount of money saved (liquid savings, e.g., homeownership is not included), some have sizable savings. So do financial institutions. These actors will not want to spend all their wealth ...

2

The Stock Exchange workers in US could strike if they wanted. The right to strike in US is enshrined in the US National Labor Relations Act of 1935. See also explanation of the law by the National Labor Relations Board to see conditions under which strike can occur. None of the conditions seem to exclude stock exchange workers. However, as @BrianRomanchuk ...

2

if you price that well, you get an efficient outcome."? Outcome to what? Efficient outcome is a basic concept in economics, discussed in most textbooks. See Pareto-efficiency. A given allocation of scarce resources is referred to as a given outcome. What does he mean the stock markets "destroy the efficient allocation of capital across the ...

2

There are a lot of differences between the two crises + how these differences manifest in the stock market. First, on the point of the stock market- it's "kinda" an indicator of the overall economy. However, it's not a perfect metric; really, it reflects the weighted sentiment of those who participate. Furthermore, the stock market is more akin to ...

2

This study, "Is There a Link between GDP Growth and Equity Returns?", compares a number of advanced economies over the period 1969-2009. On average, the growth in stock prices was just 0.3% higher than the growth in GDP. However this ratio varies considerably between individual countries. Stock price growth was 4.5% higher than GDP growth in Spain, but -3.5% ...

2

I would say that we don't generally speaking assume that stock betas are constant. For example the paper Explanations for the Instability of Equity Beta: Risk-Free Rate Changes and Leverage Effects, from 1985 (!), cites at least six other earlier papers that the market risk of securities is not stable. Many papers use a rolling window CAPM estimation ...

2

The price of a stock is the discounted value of its future expected payments. The rate for discounting includes inflation. If nothing else related to the stock except the expected inflation rate changed, the discount rate would increase, driving down the price of the stock. That's a theoretical/mechanical reason why prices might drop due to a change in ...

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