Hello, I got questions

[aznkid1294]

Hi everyone, I've just turned 16 and started taking the personal finance class at my school. My teacher is teaching me about marketing but I'm not sure about some stuffs.

My questions:
When you buy a stock, who do you buy it from?
After you buy the stock, do you pick who and when you sell it to?


Thanks everyone!

[nodoodahs]

In days of old/
When Knights were bold/
And toilets weren't invented/
.....

A long time ago, you used to place your order to buy or sell with a person known as a market-maker, who would match your buy or sell order to a corresponding sell or buy order, and who would make their money on the differences between bid and ask prices over the course of the day.

Now, with electronic trading, high-frequency algorithmic players, hedge funds capitalizing on latency trading and providing liquidity, dark pools, etc., we don't have a single clear picture of the process.

In general, you buy (ultimately, disregarding the middlemen) from someone who is selling, and you sell from someone who is buying.

This is almost never going to be the actual company, unless they're participating in the open market (rare except for share buybacks, which are mostly about mopping up excess option grants) or you're participating in an equity offering (are you a banker? then this doesn't apply).

It's usually going to be that you're trading with some other scrub like yourself, or a large institution (mutual fund, etc.) that is distributing or accumulating shares.

This is (my opinion) a fundamental flaw with the "responsible investing" crowd's logic. If I were to buy debt or shares from some company that does disreputable (in someone's opinion) things, my money doesn't go to the company, it goes (ultimately, disregarding the middlemen who take a small slice off the top) to the seller, who is probably just some poor schlep like me.

Following that logic, you don't lose money when the shares go down, and no money disappears when the market crashes. You lose money when you buy, and that money doesn't disappear, it goes to the seller, i.e., it's accounted for and certainly not destroyed in a crash.

....
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I haven’t seen a beatin’ like that since somebody stuck a banana in my pants and turned a monkey loose.

[manisharora]

[aznkid1294]

that made no sense to me what so ever..

[rffrydr]

We used to know the answer to that.
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Today is the Tomorrow you worried about Yesterday!