Hedge funds, mutual funds, sovereign wealth funds, and high net worth investors all over the globe participate in investing/trading, but what you need to understand is that most of these funds and investors will ALWAYS own stock. A mutual fund, for example, must be in stock always, and can only hold a maximum of 3% cash, depending on the fund. They are prohibited by law to sell their entire fund without prior approval to liquidate. So if they get more cash, they MUST buy more stock.
Most investors are in it for the long haul, Buy & Hold, so they are also always in stocks, and they are looking to buy more, always, whenever extra cash becomes available. Many are looking for the opportunity of lower prices to buy more.
One of the "big institutions" you fear are selling are mutual funds. They are NOT selling any significant amount. Explained above. If you "assume" big institutions are selling, ASSUME -- makes an AZZ out of U and ME.
If you get a degree in Finance, you will still know nothing about real risk or even how to properly define it (except for vague presumptions and theories) or how to size a trade, or how to reduce cost basis, or when to enter or exit the market, i.e., you still won't know much about the actual act of investing (but you'll know a lot about the system, what's available, and how it works). The media is a big collaborator in this, and they are determined to make you believe you cannot possibly manage your money better than the "experts." Obviously, they do this so you will give your money to them, for them to manage, and this is what three-fourths of Americans do.
There is a buyer for everything at the right price. Fear may set in and price may have to go lower to attract buyers, but Apple will never go to zero while they're selling record numbers of products and outstripping the competition and innovating. Add to this the fact that three-fourths of Americans are looking for the opportunity to buy stocks at a discount, and you can quickly see that your assertions make no sense whatsoever.
Fear and greed are great motivators, and fear is the strongest, but greed also has a fear component; the fear of missing out. Fund managers may lose their jobs if the market goes higher without them. They will not lose their jobs if they are holding stock, only if they under-perform. So your question works the other way also: "Who is selling if everyone is buying and the market is making all-time record highs every day?"
Again, there is always a seller at the right price, probably someone that got in at a lower price. Who is buying at a lower price? Probably someone that shorted the market or someone whom is bargain hunting or whom "must" be in stocks.
Other investors are buying the stock that companies are selling; this seems obvious. Investors can be individuals, mutual fund brokers, stock analysts, the list is practically endless.
Sometimes investors buy stock that is being sold by others because they believe the share price will eventually go back up. Warren Buffett, for example, is a big believer in this sort of thing and is great at exercising patience to prove himself correct.
And while some companies do sell stock due to bad news or bad reports, and while investors may have access to that same information, that doesn't mean they interpret the news/reports the same way.
Either way, it's essentially a gamble which means sometimes you win and sometimes you lose. The challenge is to make intelligent, informed purchases and exercise patience.
People and business buy when a stock goes down because they believe the stock will go back up. These buyers think the price is selling at a discount, or is under valued and act on the opportunity to buy low hoping they can sell high once the price recovers. I suggest reading "The Inteligent Investor" or "A Random Walk Down Wall Street." Both great books that provide a solid foundation for investment knowledge.
It is a market. A market is made up of buyers and sellers, bulls and bears. Unless there is a complete crash then it is a tug of war between buyers and sellers. There are many market scenarios but the market tends to over-react so this will tend to attract buyers when oversold and sellers when over-bought.
As a parallel example during the second world war brave investors bought whole streets of houses for next to nothing. The lucky (brave) ones made lots of money if they survived the blitz (England)
Go through this Link you can easily understand what is Stock market & how to invest in it.
It's supply and demand.
Read some info on the internet that provides additional info you can gather.
What you see on CNBC is a ticker of completed trades for various stocks - what you don't see are the order books for each stock that represent uncompleted trades - for example
AAPL
At $600 per share there might be 6000 shares offered for sale
At $605 per share there might be 12400 shares offered for sale
On the other side
At $598 per share, someone could be prepared to buy 5000 shares
At $595 per share someone could be preprared to buy 20,000 shares
These bids (offers to buy) and ask prices (offers to sell) change a hundred times a second. Eventually someone offers to buy at $599.00 a share and someone agrees to accept that price - result 500 shares of AAPL trade at $599.00.
Most of the trading is computer-generated - and again, happens lightning fast. A mutual fund or hedge fund doesn't expect to sell 100,000 shares at one go - at one price - they ask the computer to sell this amount of shares in much smaller amounts to prevent a rapid drop in the price that a large block of selling would create.
News does make the price rise or fall - quickly but the order books ensure that there is a price at which just about every stock will trade.
In a really bad situation, the stock simply stops trading - no offers to buy. For a few minutes, the stock is halted until a new trading price is discovered. Everyone works on the same news but not everyone agrees about the degree to which each stock is affected by the news.
Basically, different people will have different expectations about how a stock (and the company it represents) is going to perform. Now, if most people think a stock is going to decline (and few people think it's a good buy), then the price will decline. It's supply and demand. The price will drop enough that more people then will say, "At this price, it's a good value" and they'll buy.
In addition, different experts can have different interpretations of what's going to happen. Example: When the Federal Reserve tapers off on quantitative easing (a policy designed to keep interest rates low), what will happen to interest rates? Well, they may go up. But--and this is important--they'll go up a lot if the overall economy is strong. They won't go up nearly as much if the overall economy remains weak. And if interest rates go up, which companies will be hurt and which ones won't be? There isn't total agreement on that, and there's even less agreement on what will happen to interest rates. The point is: different investors have different expectations. So while some investors may be avoiding certain stocks, others may think those same stocks are bargains.
When bad news breaks about a company, the question is: Will that have a long-term effect or a short-term effect? And, again, different people will interpret the same news differently. If it's only a short-term effect, investors are likely to hold on and even buy more. If it's a long-term effect, then they'll sell.
Yes, big institutions sell and buy millions of shares every day.
Hope that helps.
Hi,
I have been reading about the stock market and have few questions. Everyday I read or watch bloomberg tv or cnbc, i see that stock market goes up and down by hour so my question is if things are bad and investors are selling then who are the ones buying? if the big institutions are selling then who else out there has the big money to buy? and why buy if there is a big sell off? I assume that the big institutions will start selling a lot of their shares cause they have news about the companies so then technically there shouldn't be a buyer because that buyer also has information either about the companies or the market...correct?
Do the big institutions sell and buy millions of shares everyday?
Thanks for the response.
