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Archive for May, 2020

How Stocks Work

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Wall Street, NY in 1867

For many years nobody could explain to me the rational basis of the stock market. They told me that prices were controlled by the law of supply and demand. Investors expected the the price of shares in successful companies to rise and so they bought them. This demand then drove the price up. Those who got in early enough would make money when they later sold their appreciated shares. This is all true, but it did not answer my question: why do shares have value in the first place.

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Written by David Chappell

May 27th, 2020 at 11:44 am

Posted in explainer