If a billionaire invests to buy 7% of Bear Stearns today, why didn't the share price rise by 7%? What's up wi

Home | Links | Contact Us | Bookmark

Financial Forum Search :

Financial Forum

Investing

Finance Discussion Forum

Advertising & Marketing Corporations Credit Insurance Investing Personal Finance Renting & Real Estate Small Business Taxes Business & Finance

Help! What should I invest my money into that will produce the greatest return?

I'm 20 years old and currently in college. I want to start investing now for retirement. Currently I have 3,000 that I want to invest. After that, I would like to invest a few thousand every ...

Why must stock holders pay taxes on dividends?

Correct Answer = 10 points!

Please & Thnks!...

What is the best way to invest $15,000 over the next year with medium risk?

...

What is the best way to invest 15-20 thousand....?

for a short term like 1-10 ...

First correct answer gets best answer?

According to the Mortgage Bankers Association, borrowing costs on 30-year fixed-rate mortgages averaged how much last week? 8.75%.4.75%.6.22%.5.80% and the european patent forum kicks off today in ...

The stock market?

yea im young like 16.lol

but my dad has made alot of money in the stock market.

i dont really understand it.....but i would like to.

does anybody know any websites or ...

Are you guys worried about long term health of economy and financial status of middle class or common people.?

...

What is 15 percent off of 40 dollers?

...

How much is gold currently per gram?

Say the $gold index is at 1000 (to make things simple). How much is the gold today. Is the 1000 meaning $1000/ounce? per kg? Thanks in advance.......

Any new investment ideas?

Looking to invest-prefer that it be in American companies, but I'll take other countries as well. I'd like to invest in newer companies....

What are you supposed to do with your 401k after you leave your employer?

I recently started an internship for a company that offered a 401k program so I decided to get a head start on retirement and invest. However, I am entering graduate school in the fall and will no ...

Where can I buy stocks online?

...

Explain what insider trading means please?

...

How do you know when a business idea will work?

My grandmother owns commercial property in a place called "old central city", it's basically a long street with a lot of antique stores. I can utilize her space @ no cost, but I'd ...

Will the price of gold continue to rise?

...

What in your opinion will be an ideal basket of Indian shares to hold?

You are creating your own Mutual Fund . Given the current market situation and future trends,which shares of 10 Indian companies would you buy and hold . Please attempt to spread these 10 ,across a ...

I have gifted money to invest long term. How should I go about it?

I will be receiving money from an Uncle's will. I would like to start saving for retirement. Any suggestions out there as to what I should start doing? Any good reading materials to start me ...

Good time to "jump in" the stock market for the 1st time investor?

Ok one person will say " buy now everything is on sale!" buy low sell high right? But someone else will say " get out while you still can" if you buy now you will surely be sorry ...

How do i invest in the stock market without going thru a broker and not paying anybody commisions?

...

Stock market-what should I invest in?

It has to be either either nasdaq or nyse. Only U.S!
Every thing I have invested in is going down. Please suggest something that is increasing the in market and explain why.

T...

skahhh

If a billionaire invests to buy 7% of Bear Stearns today, why didn't the share price rise by 7%? What's up wi

th that? If the company is worth 7% more and he bought the shares on the open market, why didn't share price go up in proportion to the new value assessment?
Additional Details
If there is a 7% buying of a company's stock and no selling then the buyer would make the price go up. If the company is selling stock or somebody is, then the price would correspond to the difference in buying or selling. I got that. So that means somebody is selling their stock in Bear Stearns.

Mark B

Why would the company be worth 7% more? He's purchasing existing shares.

Look at it this way. You have something worth $100, someone buys 7% of it ($7). The total value is still $100. It doesn't magically become $107.

Rich Z

You have no idea what drives stock prices.

If the stock was being bought by someone who could make a mess of the company if they eventually got a seat on the board of directors the stock price could drop like a rock. If the shares were bought from someone who was willing to sell at the market before the market rose significantly there might be no change. If shares were tight and someplace like CNBC said they just heard a rumor that the company was a takeover target the shares might go up spectacularly in anticipation of a big buyout price. If a hurricane approached Gulf oil rigs all of the stocks in the market might lose value even though that is unrelated to Bear Sterns.

Justin H

When an investor buys shares, they are not buying new shares, they are buying shares that someone else held. In other words, that 7% belonged to someone else the day before. Now, that big of a purchase should have put upward pressure on the stock price, but not necessarily a 7% increase.

The other thing to remember is that purchase did not affect the company's financial picture. That 7% was transfered from one private owner (or multiple owners) to a different owner. The money went to the previous shareholder(s) and not the company.

The only time stock purchases actually affect the company is if they issue new stock. And when they do this, it dilutes the value of the stock because that means the pool of dividends has to be divided up more than normal. Of course it depends on whether the new stock was common or preferred (and I can't remember the difference right now).

sharkee

Because he only bought 7% of the shares in issue and somebody had to sell them to him.
The knock on affect is a rallying of the share price but not necessarily 7% .

Ranto

What makes you think that the company is worth an extra 7%?

If he bought the shares in the open market, the company doesn't get any of that -- the people who sold him their shares get the money.

Your logic would imply that General Motors would get a check every time someone sells a used Chevy.

stephenweinstein

You are correct in the last sentence of your additional details. Somebody is selling. Somebody is always selling when somebody is buying.

Perplexed

Just because someone buys seven percent of a companies shares doesn't change the value of each share. It simply changes the ownership of those shares. The companies value stays the same.

Now if the company increased it's market share by seven percent, that would have a definitive impact on the value of each share.

Enter Your Message or Comment

User Name:
User Email:
Post a comment: