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I know the whole market economics of worth more, and supply/demand, etc. But how do they physically gain value? For example, assume a basic example that in our world, we have a total of 100$ of liquid cash at hand, that is physical, existent money. I now have 1 stock worth a penny. Doesn't seem too bad. But when the stock price goes up, where does the money come from to pay the difference? When it's under a hundred dollars, you could claim from the physical assets, but what about when it goes beyond that price.

Another example, assuming the same constraints as above, i issue 1000 shares at a penny each, that's 10 dollars. If each share goes up by 50% that's 15$ total, which is still fine. But let's just assume the value goes to 11$ a share, where the fuck does the money come from to payout the dividends or price of the shares? There isn't enough physical money for the payout anywhere. I know the federal reserve runs cover a lot of times for this bullshit, but there just doesnt seem to be a long term solution to the stock roulette

I know the whole market economics of worth more, and supply/demand, etc. But how do they physically gain value? For example, assume a basic example that in our world, we have a total of 100$ of liquid cash at hand, that is physical, existent money. I now have 1 stock worth a penny. Doesn't seem too bad. But when the stock price goes up, where does the money come from to pay the difference? When it's under a hundred dollars, you could claim from the physical assets, but what about when it goes beyond that price. Another example, assuming the same constraints as above, i issue 1000 shares at a penny each, that's 10 dollars. If each share goes up by 50% that's 15$ total, which is still fine. But let's just assume the value goes to 11$ a share, where the fuck does the money come from to payout the dividends or price of the shares? There isn't enough physical money for the payout anywhere. I know the federal reserve runs cover a lot of times for this bullshit, but there just doesnt seem to be a long term solution to the stock roulette

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[–] • 0 pt (edited )

Price fluctuates because someone wants to sell at a price, and someone wants to buy at a price.

If you issue shares at $0.01, and your company is doing well and making a good profit and paying out a portion of those profits as a dividend, then people will generally want those shares of your company and will ask more for them during a sale. If someone is willing to pay that, that's the new price. If your company is doing poorly, people are willing to pay less for the shares and the price will generally adjust to that lower value if there are sellers willing to sell. If there are no or few shares for sale then the price may not change a whole lot, if at all.

The company generally has no say in the matter, and doesn't receive or broker any of the sales. That's what the brokerage firm does.

Dividends are just a portion of the profit returned to those shareholders. No profit, no dividend unless you're trying to maintain a payout streak at the risk of insolvency.

This is way over simplified, but it's essentially someone wants to sell, someone wants to buy, and they settle on a price.

[–] • 1 pt

I understand that part, where i draw a blank is the physical conversion of resources when the sell price outpaces the total value of resources in that nation. Gamestop is a great example of how wrong it can go, but im just surprised the only solution we have to now is the capital gains tax and early withdrawal fee

[–] • 1 pt

There really isn't any "money" as in gold/silver/tangibles to cover this stuff, it's all because the government(s) say their fiat is worth something.

It's all just theoretical money until it's cashed in. If all shareholders tried to cash in at once, the price would crash because of a market glut and lack of buyers.

[–] • 0 pt

Lol. Maybe 10 years ago. Now it's all about money flows and popularity. Money flows over there, prices go up over there.

Right now the money is flowing to stocks. So stocks go up. Profits have been decreasing for 5 years so the old model is obsolete.