Lesson 4 of the BUX Homeschooling series is short but sweet. And very important! We’re going to solve one of the biggest misunderstandings in the financial reporting world.
If you follow a lot of stock market news, you’ve probably seen headlines like this:
“Investors dump their shares en masse”
“Investors sold their shares.”
Or something like:
“Investors sold their shares of [company X] at breakneck speed.”
But remember from now on: there is no such thing as ‘dumping’ or ‘getting rid’ of shares. Where do you think they go? In a roadside skip?
There’s a buyer for every share sold
Only the buyer paid less money for it than they would have a few days ago. But for every share sold there’s a buyer. And for every argument to sell, there’s an argument to buy, and vice versa.
Headlines like “Everyone sells their shares!” do well for clicks, but they are just plain wrong. That’s because there are just as many buyers out there. No transaction can take place without the buyer. There is no market without both sides of the trade.
So from now on, you can shout ‘bullshit!’ when you hear or read that everyone is dumping their shares, or that there are more sellers than buyers. There are just as many.