$11: GM Stock Falls Hard At Market Open On Goldman Downgrade

[Inchworm]

Something puzzling me with a post a while back. (#77?) Institutional investors having a price point at which they sell big blocks of stock. Thing is... there has to be someone willing to BUY those shares. Otherwise the institutions can't sell them. So another big institution gets a bargain on a large block, or many small investors get a few shares each. In this free market, there has to be both a seller and a buyer for a transaction to take place.

Or am I missing something really basic that will make me feel foolish when it is explained to me? 'sokay, been foolish before.

[wescoent]

Originally Posted by Inchworm

Something puzzling me with a post a while back. (#77?) Institutional investors having a price point at which they sell big blocks of stock. Thing is... there has to be someone willing to BUY those shares. Otherwise the institutions can't sell them. So another big institution gets a bargain on a large block, or many small investors get a few shares each. In this free market, there has to be both a seller and a buyer for a transaction to take place.

Or am I missing something really basic that will make me feel foolish when it is explained to me? 'sokay, been foolish before.

Very simply explained, GM is sold on the NYSE. On the NYSE floor, there is specialist ("dealer") for GM stock. Whenever you sell the stock, you're selling to that dealer. When you buy, you're buying from that dealer. He sets the price based on how many people are buying versus how many are selling. He also holds a lot of stock on his book in order to ensure liquidity in the market.

[FenwickHockey65]

GM's been pretty stable today around $11.50/share...it's actually up +0.07 right now at 12:10.

[Extreme4x4]

Well see, the recovery has begun already.

[2002 Caddy]

Originally Posted by wescoent

Very simply explained, GM is sold on the NYSE. On the NYSE floor, there is specialist ("dealer") for GM stock. Whenever you sell the stock, you're selling to that dealer. When you buy, you're buying from that dealer. He sets the price based on how many people are buying versus how many are selling. He also holds a lot of stock on his book in order to ensure liquidity in the market.

Yes that is a nice description of how it works... This myth that for every seller there is a buyer is just that... a myth... Very often (most times actually) you are buying and selling out of a broker's "allotment" or "pool". The even bigger myth is that every time someone loses money in the market someone makes money.

As the above post nicely documents if there is little to zero demand to buy a stock the price will drop... and drop... until demand develops... millions (billions even) can be lost without a single share trading hands.