# Instant Stock Money **URL:** \ **Category:** Factual Questions\ **Created:** [June 15, 2011, 7:51pm UTC](https://boards.straightdope.com/t/instant-stock-money/585596 "2011-06-15T19:51:35Z")\ **Posts on this page:** 2\ **Page:** 2
**Author:** ![Absolute](https://avatars.discourse-cdn.com/v4/letter/a/b2d939/32.png) [@Absolute](https://boards.straightdope.com/u/Absolute)\ **Post date:** [June 16, 2011, 1:04am UTC](https://boards.straightdope.com/t/instant-stock-money/585596/21 "2011-06-16T01:04:28Z")
> [@Shagnasty](#): > > Most stocks are a little strange when stop talking technically and break it down for they are. Stocks that don’t pay dividends don’t have that much to do with the original company once they are created and sold. The company gets money during the initial IPO but then they are just traded among individual investors for whatever they are deemed worth in the abstract sense after that like trading cards. Investors can bet on a stock going up or down and make money off of individual shares that may have little to do with realities of the company whose name on the stock. The company doesn’t get any money directly if your shares with its name on it go up or down. They can trade that way outside of the company indefinitely which is which most shares do. By creating new shares, they can just get the money and do what they want with it. > > People will argue that stocks are always closely tied to the performance of the company itself because the company itself owns many shares and may want to buy them back at some point. That can and does happen sometimes but it doesn’t have to. It is a strange game based abstractions on top of predictions. The technical details obscure the whole game but the rules of it sound bizarre when they are broken down plainly because they really are. It is really not that bizarre or abstract. Shares in a company represent fractions of ownership of a company. If you think GE as a company is worth X billion dollars, and there are Y million shares outstanding, then you think X / Y is what each share is worth. Owning shares also gives you the right to vote (along with the other shareholders) on how the company is run, kick out bad management, and so forth. ---
**Author:** ![Shagnasty](https://avatars.discourse-cdn.com/v4/letter/s/9dc877/32.png) [@Shagnasty](https://boards.straightdope.com/u/Shagnasty)\ **Post date:** [June 16, 2011, 2:19am UTC](https://boards.straightdope.com/t/instant-stock-money/585596/22 "2011-06-16T02:19:17Z")
> [@Absolute](#): > > It is really not that bizarre or abstract. > > Shares in a company represent fractions of ownership of a company. If you think GE as a company is worth X billion dollars, and there are Y million shares outstanding, then you think X / Y is what each share is worth. > > Owning shares also gives you the right to vote (along with the other shareholders) on how the company is run, kick out bad management, and so forth. That is what they say but people break it down very technically very quickly to lose the overall point. If you buy shares of GE, you do own a percentage of the company on paper. However, you can’t actually point your finger at any concrete thing you own except for the (virtual) certificate. You can vote to help make decisions but your vote counts for very little for any reasonable amount of stock and it is perfectly possible for it to count for zero among all outside shareholders if the company itself still owns a controlling number of shares and can override anything. As a shareholder, the direct goal isn’t to make sure the company is as well run as possible at all times. The direct goal is to get the share price up high enough so that you can pass your shares onto another person and take your profit. Repeat. Stock prices don’t go up or down just based on company performance. They are also influenced by investment cycles and speculative bubbles. They can go down sharply even if nothing has changed fundamentally just based on fear and panic of other investors. Voting to ensure long-term viability isn’t always the goal. You may hope they will push out a new product as fast as possible to get the share price up and then get rid of it taking the profit with you just based on other people’s guesses and herd mentality. Pricing stocks would be easy if it were just simple math problems but it doesn’t work that way. I am not saying the market doesn’t move based on real financial prospects for the company because it tends to but it isn’t a direct, lock-step relationship. [Previous page](https://boards.straightdope.com/t/instant-stock-money/585596.md?page=1)