What if everyone sells but is wrong/company profits?

[goldfoejax]

I'm just learning how the market works. Suppose this, and please correct anything I may be wrong about:


I buy a bunch of shares at 10$ and after which, almost EVERYONE else that owns that stock decides to sell their shares to other people for less then $10 because they think the company is going down in profit but it actually goes up.
From what i've read, the shares everyone else sells become lower cost/value because there is a high supply of them and the sellers are desperate to not loose ALL of their money.

The stock I own would become less per share then i paid, so I can not profit by finding others to buy my shares for more than I paid because due to the high supply, shares are offered for less than I paid. So, then, my only way to profit would be to wait for the company to pay out the share holders(me) and HOPE that the value goes up from below $10 (because everyone that sold it at $10 F'd up) to above $10?!?

How often does the company 'pay-out' if it's that type of stock? Every quarter year, or are they all at different time periods?


all i'm really asking is if this scenario is possible:
soo many share holders of a stock i also own think the value is going to drop a lot, so they sell it for less than it's worth/i paid because the new buyers won't pay what's it's currently at because they also think the value might drop. So, then the shares I own become less valuse because of all the shares that are trying to be re-sold for less, right?
thanks

[DogDayTrader]

@ goldfoejax:

If I understand your question, my answer is as follows: Yes

Just kidding.

In regards to you question(s) about share price:
If you buy X amount of shares of company XYZ for $10 ea. and then, due to whatever reason, the price per share (PPS) drops to $8, your shares will only be worth $8 ea. (assuming you can find someone to buy them). A good thing to remember is that something is only worth what someone else will pay you for it. Your shares are only worth the current market value, so if you sold your shares at $8 ea. you would incur a $2 loss per share. There is an old saying that goes something like "A loss is not a loss until you sell." and although this is technically true, it fosters a false sense of "security". This type of psychology often has investors holding on to loosing positions in the hopes that they will one day turn a profit.

In regards to you question about "pay-out":
I believe that you are referring to dividends, the money a company "pays-out" to its shareholders. Not all companies pay dividends and most of those that do have dramatically slashed their payouts due to the recent/current economic situation. As to when a company pays-out it's dividends, it depends on the company. In the U.S. the most common form of dividend payment schedule is once a quarter, or four times a year. However, some companies only pay dividends once a year.

I hope this clears things up. Just let me know if you have any more questions and welcome to the community!

DDT

[Edward Hay]

The stock market has incredibly high volume so no one would ever pay more for a stock that they can find elsewhere. If you're looking to sell a stock for more than $10 but the market is currently trading it at $8 then why would someone buy the stock from you when they could buy it cheaper? Also, in answer to your second question - I don't think you're talking about dividends. I think you're talking about compensation that the company would pay you to compensate for your losses. The answer is that this never happens. The stock owners own the company so if the company paid them, it would be the same as the owners of a company taking money out of it and putting it into their personal accounts. Therefore there is less money inside the company and the value of the company (and it's shares) drops even more. Make sense?